CHAPTER 1

OVERVIEW OF MANAGEMENT CONSULTANCY SERVICES BY CPAs

Consultant

A consultant is someone who has expertise in a specific area or areas, equipped

with proper professional skills, and offer himself to clients - to assist, generally in solving
specific management problems and propose unbiased opinion or advice.

A consultant is not an employee but rather, an independent contractor usually

self-employed, contracted to perform a short-term or long-term task and may be paid in
an hourly, daily or project basis or other fee arrangement.

Anyone can be consultant; however one must have proper and required
competence, experience and technical ability to solve business problems.

Its not limited to CPAs

Advantages of CPAs over other professionals in rendering MAS

Familiar with client and his business, in terms of financial, and other
quantitative prospects thus enjoying the confidence of clients
Recognized standing
Academic training and board examination requirement

Common Reasons for joining consulting career

People who are frustrated with their current careers, who see solutions for the
problems but are unable to effectively influence decision-makers.
People who want a stimulating, dynamic, growing career that satisfies the need
for personal development
People who see that they may be laid off and wish to establish themselves in a
business to earn a livelihood; these people may start on part-time basis while still
employed.
Retired people who have expertise and wisdom to offer
People who want to supplement their income
People who want to combine a family life with work at home.
People who love to share their knowledge to help their clients
Having no boss
People who want to give back to community by providing expertise and
assistance in community-based projects.

Evolution of MAS in CPA firms

Unlike other areas, the management consultancy or advisory services has,

however become a rapidly growing new area. When a CPA firm during the course of an
audit discovered problems in a clients business, it was natural for them to make
suggestions for corrective action. In response, the client often engaged the CPA to make
a thorough investigation of the problem and to recommend new policies and procedures
needed for a solution. Gradually, public accounting firms found themselves becoming
more and more in management consulting work. So in recent years, responding to the
increase in demands of clients for outside assistance, CPA firms have created separate
management advisory services divisions which are staffed by industrial engineers,
lawyers, statisticians and as well as accountants. The qualification of management

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consultants sometimes include special training and experience, skills and research
capabilities to apply an analytical approach to the solution of management problems.
Because of increasing complexity of business, more and more small and medium-sized
businesses are looking to their auditors for help in the area of controllership. However as
MAS are extended further into other areas, members of the profession feel that there is
increased pressure against independence of the CPA which cannot just be taken lightly.
In fact, regulatory agencies such as SEC, the Board of Accountancy through the
promulgated Code of Ethics specifically prohibit the CPAs from performing certain
consultancy services to their external audit clients. The accounting firm should therefore
strive at all times to limit itself to providing advice and technical assistance to clients and
avoid making management decisions or taking positions that might impair its objectivity.

Evolution of MAS in the Philippines

Substantial interest in the field of MAS emerged in the Philippines with the
passage of Accountancy Act of 1967 which provided the inclusion of Mas among the
subjects in the CPA board examinations

In 1968, the PICPA formed its first committee in MAS, which issued a paper
entitled Management Services: an Overview

Nature of MAS by independent accounting firms

Management Advisory Services by independent accounting firms can be

described as the function of providing professional advisory services, the primary
purpose to which is to improve the clients use of its capabilities and resources to
achieve the objectives of the organization.

Management Consulting can also be described as an independent and

objective advisory service provided by qualified persons to clients in order to help
them identify and analyze management problems or opportunities. Management
consultants also recommend solutions or suggested actions with respect to these
issues and help, when requested in their implementation.
o Consultation normally consists of providing advice and information
during a short time frame. The advice and/or information is provided orally
during one or more discussions with the client. Often, however, such
advice and/or information will be qualified by stated limitations due to lack
of first-hand observation of the problem situation or lack of familiarity with
the underlying technical aspects, and so on.
o Engagement consists of that form of MAS in which an analytical
approach and process is applied in a study or project. This approach
typically involves-
1) Ascertaining the pertinent facts and circumstances
2) Seeking and identifying objectives
3) Defining the problem or opportunity for improvement
4) Evaluating and determining possible solutions
5) Presenting findings and recommendations, and
6) Implementing the solution, if appropriate

and following the clients decision to proceed, the independent accounting

firm may also be involved in:

Planning and scheduling actions to achieve the desired

results
Advising and providing technical assistance in
implementing

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 in combination with knowledge and experience in such areas as:

Organization and management method

Office and management functions
Systems and procedures
Data processing methods
Quantitative methods
Financial management

to produce solutions such as:

A management information system

A sales reporting system
A cost accounting system
A work measurement program
Improved production control
An organization plan with statements of duties and
responsibilities, or
An electronic data processing system

Rationale for using Management Consultants

1) Independent viewpoint
A consultant is considered independent, objective and detached to the
problems faced by the organization. These qualifications enable him to
see the real nature of the problems and distinguish between feasible and
infeasible solutions.
2) Professional advisor and counselor
An experienced management consultant possesses special knowledge,
skills and variety of personal attributes that make him the most desirable
candidate to undertake an engagement involving his area of expertise
3) Temporary professional service
The use of consultant is less expensive to the company than hiring new
managers or employees to provide professional advisory services,
sometimes, organizations find themselves short or critical professional
resources and management consultants can in such cases fill in as
temporary professional help.
4) Agent of change
A management consultant is a catalyst for change. The way consultants
assist and influence the decision of the client, there could be a change,
whether from its production, administration and others.

The consulting industry

a) Information technology
b) Corporate strategy
c) Operations management
d) human resources managements

The fall of consulting industry

In 2002, for the first time in three decades, the market fell by 6% due to a tougher
IT market and an increased skepticism among consultancy clients following the Enron
Scandal.

The rise of consulting industry

In 2003, the industry has grown again due to the following factors:

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 1) Increase in demand due to the intensification of complexity and
competitiveness brought by globalization and information technology.
2) Internets impact on the operation of industries
3) Demand from governmental and associated organizations

The growth of management consultancy

1) Growth in size and complexity in business firms

2) Lack of competent staff
3) Industrialization
4) Need for adequate and timely information

Types of Consulting Firms

A. IT Firms
B. Accounting Firms Offering Consultancy
C. Major Consulting firms only
D. Independents

Career Structure in Consulting Firms

1) Analysts
Most graduates would start from here. Analysts are usually responsible
for gathering and processing information for the consulting team
2) Consultants
These are either promoted analysts or those who have been in industry
and have moved to consulting as a career change. Consultants undertake
the evaluation of the client business and make recommendations on its
behalf.
3) Senior consultants/managers
More experienced consultants have responsibility for leading a consulting
team undertaking a project on behalf of a client. They would typically
have 3-5 years of consulting experience and have already demonstrated
their ability to take on the responsibility of running small consulting
projects. They would also be more involved in dealing with members of
the client team.
4) Business development managers
Business development managers within the consulting business are
responsible for developing the firms products and building its relationship
with clients. They will also be involved in some large, complex consulting
projects at a strategic level. Most at this level would have 5-10 years of
consulting experience.
5) Directors/partners
These are the most experienced consultants who take on responsibility
for the development of the organization as a whole and who lead its
strategic development. They will also maintain contacts with senior
personnel in the client companies and will have overall responsibility for
projects. As the most senior in the organization, it would be expected that
they would have 10+ years of experience in this field.

Developing Trends

The practice of management consulting has changed dramatically since the mid
90s. Management consultancy now specializes in information systems automated
offices, financial analysis and modeling budgeting and cost controls, organization
structures, personnel compensation, strategic planning and a host of other area. Since

4
there is an increasing demand for consultancy, theres also a trend in improving
business education.

Change in management culture as well as growth in size and complexity of

institutions have likewise propelled the need for management consultants.

Completion has forced companies to re-engineer their inefficient business

processes and retain their workforce

Technological developments have occurred at a breathtaking pace in such areas

as information sciences and decision sciences

Future Prospects

Management consulting will become more specialized

The consultants orientation will be towards being an insight provider,
creator and sharer of information
Management consulting firms will tend either to remain small or to
become quite large
As consultants grow in number, they will develop more sophisticated
means of marketing their services
More and more will be attracted to consulting

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 CHAPTER 2

AREAS OF MANAGEMENT ADVISORY - PART 1

Types of MAS Engagements:

1). Nature of the Problem

a. Corrective problem involves a situation in which conditions have worsened. It

usually arises suddenly and demands urgent action.

b. Progressive problem involves a situation that can be improved.

c. Opportunistic Problem involves a situation in which a future opportunity

exists.

2.) Service Delivery Areas

a. General Management

b. Manufacturing

c. Personnel

d. Finance and accounting

e. Marketing

f. Procurement

g. Research and Development

h. Packaging

i. Administration

j. International Operations

3. Application of Analytical Powers

a. Identifying the Objectives

b. Defining the Problem

c. Finding out the Facts

d. Developing the solutions

e. Implementing the solution

4. Techniques and Methodologies Applied

Example: Capital Investment Planning can be aided by discounted cash model

such as present value or IRR model.

5. Industry or Nature of Organizations

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6. Geographical Areas

Areas of MAS Practice

Management consulting can relate to areas such as:

1. The management functions of analysis, planning, organizing, and controlling.

2. The introduction of new ideas, concepts and methods to management.

3. The improvement of policies, procedures, systems, methods and organizational

relationships.

4. The application and use of managerial accounting ,control system, data

processing and mathematical techniques and methods

5. The conduct of special studies, preparation of recommendations

The areas of management consultancy are varied and wide-ranging. The most sought
after types of consultancy include:

1. Business planning and Development (Project Feasibility Studies)

This type of project is a great opportunity and offers the consultant a broad remit
to contribute to the development of the business.

Common outcomes derived from business development include:

Growth of the business within its core markets by capitalizing on market growth
or market share increase

Expansion of the business into a new market sectors

Development of new products

Increasing profits through cost-reduction programs

Internal structural reorganizations

2. Information Systems Consulting

Information is a corporate resource.

Management information systems aim to collect and organize such information

and present it to managers in usable form. A consultant can add value by developing an
understanding of the flow of information needs of the business, the way in which
information flows around the organization and competitive advantage that might be
gained through investment in information technology. This provides a sound basis on
which to progress the technical implementation and helps ensure that it will be
rewarding.

3. Internal Audit Services

Internal Auditing is an independent, objective assurance and consulting activity

designed to add value and improve an organizations operation.

It helps an organization accomplish its objectives by bringing a systematic,

disciplined, approach to evaluate and improve the effectiveness of risk management,
control and government.

4. Management/ Operations Audit

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 Operational Audit also known as management audits and performance audits are
conducted to evaluate the effectiveness and/or efficacy of operations.

These are examinations of all or part of an entity to determine the degree of its
operational efficiency, effectiveness and economy.

5. Business Process Involvement/ Reengineering

A business process is any series of steps that are followed to carry out some
task in business. It is diagrammed in detail, questioned and then completely redesigned

a. To eliminate unnecessary steps

b. To reduce opportunities for errors

c. To reduce cost

Re-engineering is a complete redesign of a process with an emphasis on finding

creative new way to accomplish the objective

Factors:

- Cultural Factors

o Organization culture refers to the mind-set of the employees, including their

shared belief, values and goals. Research on organizational behaviour suggests that a
strong functional culture is, in the long run, the most conducive to successful
implementation of programs oriented toward continuous improvement.

- Managing Organizational Change

o A change champion is an individual who recognizes the need for change and
seeks to bring it about through his or her own efforts. A successful change champion is
usually at a high level in the organizational hierarchy.

o Meaningful change is more likely to occur if there is a well-defined process

established for change. A timetable for certain activities, a set of well-articulated goals
and follow-up are all important elements of such a process.

o In a new business process improvement, each employee should be made aware

of (1) The goals of the program (2) the process by which the program will be
implemented and evaluated (3) the employees role in making the program a success.

Other types of consultancy work

Marketing Research

Marketing Research is the process through which managers discover the nature
of the competitive environment in which they are operating. It falls into two types:

o Primary Research information collected for the specific project.

Quantitative research expressed in statistical / numerical form

Qualitative research provides insights that the managers who, what and why
questions.

o Secondary Research based on information that has been collected earlier for
reasons other than the project at hand.

Marketing Strategy Development

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 Marketing strategy defines the approach the business will take in order to get the
customers attention and critically- get them to spend their money on the businesss
products or services.

It is built in the questions:

o What products do customers want from a sectors produces?

o In what way are competitors failing to produce these products?

o What prices are the customers willing to pay?

o What are the channels available for getting the product to the customer?

o Who might be the partners in the distribution process?

o How might they be approached?

o In what ways can customers be informed that the product is available?

o How can the customers interest be stimulated through promotion?

Developing Promotional Campaign

A promotional campaign is any program of activities dedicated to informing

customers about a product, stimulating their interest and encouraging purchase.

Planning Sales Force Activity

A sales team is a primary promotional tool. Detailed and thoughtful planning of

sales force activity is a process which offers real returns. Some key issues are: overall
organizational of the team, sales team training, sales team motivation, planning sales
campaign.

New product Development

A consultant can offer support to the new product development by:

Understanding the customers needs through market research

Technical advice on product development

Identifying and contacting suppliers of critical components

Development of marketing and PR campaigns to support the launch

Developing promotion campaigns to get distributors on board

Financial planning and evaluation of the return on new product development

Developing Proposals for Financial Support

Consultants are often called in to offer advice in four critical areas :

Evaluation of the businesss investment needs

Identification of funding providers and how they might be contacted

Developing understanding of the criteria employed by funding providers and how

these might be addressed

Developing communications with funding providers, particularly in relation to

proposals and business plans.

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Staff Requirement

A consultants contribution to recruitment projects might include:

Assessing the firms human resource requirement and identifying skill and
knowledge gaps, both currently and predicting the future

Creating advertisement to attract the right people

Developing assessment criteria, interview, procedures and possibly psychometric

testing of candidates

Advice on the reimbursement package the new recruit might expect.

Exporting and International Marketing

The consultant can supply:

An overall insight into regional, social and macroeconomic development

An analysis of the growth and evolution of specific markets

An evaluation of consumer needs and requirements and how these are being
satisfied currently

Information on regulatory and legal issue

Details of the existing supply structure and competitors present

An investigation into distribution channels and possible partners

Information on advertising and promotional opportunities

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 CHAPTER 3

AREAS OF MANAGEMENT ADVISORY - PART 2

Management Consultancy Services by CPAs

Traditional Services

1. Managerial Accounting

This engagement involves providing assistance to management related to planning and

controlling business operations as well as decision making.

Ex. FS analysis, Budget and Preparation, Cost analysis planning and controlling,
Variance analysis, Development and installation of responsibility accounting and
evaluation of responsibility center

2. Design and appraisal of accounting system

This involves development of accounting systems for a newly-organized firm; revision of

an existing accounting system; Extension of the present accounting system; accounting
service in general; accounting machines installation; internal control studies and
installation.

*Accounting system allows a business to keep track of all financial transactions and
generate a comprehensive statistical report.

3. Financial Management-related services

Ex: Study of working capital requirements, study of methods of financing acquisitions,

credit and collection practice studies and advice, analysis of capital investment
proposals, study of alternative methods of financing expansion, survey of pension,
retirement and profit sharing plans, preparation of feasibility studies for new projects,
valuation of capital stock of companies for purposes of merger or sale.

4. Project Feasibility Studies

A feasibility study is used to determine the viability of an idea. The objective is to ensure
a project is legally and technically feasible and economically justifiable.

Emerging Consultancy Services

5. Global Risk Management Solution

This involves managing the totality of risks-financial, operational and systems and
strategic to improve financial and business performance. It covers determination of
critical risks that the firm faces, development of recommendation to reduce risk exposure
and identification of opportunities for growth and expansion.

Areas of risk management services include:

a. Financial risk management

b. Strategic risk management

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c. Operational and system risk management

d. Compliance risk management

e. International audit services

6. Transaction services

This involves services related to business transactions such as mergers, acquisition,

divestitures, joint ventures, spin-off and strategic alliance and also helps the firm to
access the global capital markets.

Ex. Due diligence services to uncover potential financial and strategic risks and rewards

7. Financial advisory services

CPAs provide comprehensive, financial, economic and strategic advice to companies

with complex business problems and disputes. Examples are services related to
investment banking, fraud and dispute analysis, intellectual property disputes, etc.

8. Project Finance and Privatization

This involves management advisory services related to partnership between the public
and private sectors in delivering infrastructure and services or privatization and project
finance. Example: development of commercial structure for a deal, including risk
mitigation and contracts; development of a financial structure to get the right mix of
financial instrument in a tax efficient package.

*Privatization process of transferring an enterprise or industry from public sector to the

private sector.

9. Valuation services

These include service that guide clients through complex business transactions such as
acquisition or divestiture of investment, debt structuring and finance-raising entry to
major stock exchange.

10. Business Recovery Services

CPAs provide services to troubles businesses by emphasizing on the implementation

and rationalization of recovery programs designed to rebuild value. Examples: creditor
service, insolvency services, insurance services.

11. Dispute Analysis and Investigation

Common types of services under this are: environmental analysis, real estate damage,
investigative services, and construction disputes.

12. Computer Risk Management

Consultants help their clients understand and manage their business risk relating to the
implementation and use of technology.

13. Application Software Selection and Implementation

This involves assisting clients in prioritizing their needs, identifying the right software and
tailoring it to meet their specific requirement.

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 Determining the Scope of Service

1. Responsibility to establish scope of services

2. Independence

The accounting firm when providing MAS should give particular consideration to both
independence and the appearance of independence. It is suggested that a CPA
rendering MAS and at the same time serving the same client as independent auditor
should not make management decisions that could impair his objectivity and
independence.

3. Competence

Competence in a professional work involves both the technical qualifications of staff

personnel and the firms ability to supervise and evaluate the quality of the work
performed.

4. Requirements for specialization

Requirements for specialization may limit the scope of MAS offered by an independent
firm that might cause them to exclude areas which are already provided by others in the
same profession.

5. Identification and resolution of clients basic problems

The scope of services offered by the independent firm should be adequate to identify
and resolve the basic client\s problems.

6. Referrals

Referral of MAS work to other independent firm is another way of developing the firms
capability. The referral arrangement may also provide for an effective means by which
independent accounting firms could develop cooperation thereby expanding their
knowledge and scope of service toward providing the full range of MAS.

7. Code of professional ethics

It is the responsibility of the independent accounting firm to assure itself that the nature
and scope of the MAS it elects to offer are in conformity with the code of professional
ethics.

Types of Clients Served

1. Contact Clients

- A person who first approaches the consultant and proposes that the consultant
addresses a problem or issue on behalf of the organization.

2. Intermediate clients

- These are members of the organization who become involved in the consulting
project. They will work with the consultant, provide information, sit on meetings and
influence the way the project unfold and may also be the actual recipients of the report.

3. Primary clients

- Persons who have identified the problem or issue the consultant has been called
in to address and who are most immediately affected by it. It is they who are willing to
pay in order to have the issue resolved.

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4. Unwilling clients

- Members of the organization who will be affected (but are not aware) by the
intervention of the consultant. They do not initiate on the project and have no direct or
formal control over it.

5. Indirect clients

- Members of the organization who will be affected by the intervention of the

consultant and who are aware of that they will be affected. However , the consultant is
not aware that the project will have an impact on them. They can be very influential and
can facilitate or hinder that progress of the project.

6. Ultimate clients

- These are the total community that will be affected by the consultants
intervention. This includes members of the organization and possibly members which
come into contact with the client organization.

Groups of Clients:

1. Privately-owned business firms

2. Government agencies and organizations

3. Not-for-profit nongovernment organizations

4. Professional associations

5. Others labor unions, sports organizations and religious organizations

How Consulting Adds Value

Hiring a consultant involves:

a. An immediate financial cost

b. Disruption of a managers routine

The decision to call in consultants happens after a consideration of the costs and
benefits involved and a conclusion that the benefits must have outweighed the costs.
Management consultants must constantly ask three fundamental questions:

a. What can I offer the client business that will enhance its performance and help it
achieve its objective?

b. Why will my contribution be more valuable than that which existing managers
and potential recruits can contribute?

c. How can I communicate to the client business that what I offer is valuable?

The actual output of a consulting exercise centers on providing one or more of the
following:

1. Provision of information

Much information has a direct cost while if there is no direct cost there may be a hidden
cost in the management of time and effort in gathering information. The consultant can

14
add value by analysing and presenting information in a way that enables the business
manager to make effective measures from it.

2. Provision of specialist expertise

Areas of management that can benefit from the insights and ideas of a specialist are:

Business strategy, marketing strategy development, marketing research studies,

promotional campaign development, information systems development.

3. Provisions of new perspective

Consultant can offer a fresh mind to an issue and can contribute some conceptual
frameworks that open up thinking and aid the development of the managers cognitive
schema.

4. Provisions of support for internal arguments

Conflicts of opinion take a variety of form between managers. They can be seen as a
refreshing opening of possibilities or they may lead to smoldering resentment.

A consultants opinion is of clear view. It can be presented as independent and a

coming from and expert. The following are a few ground rules:

- Understand the politics of the consulting exercise

- Be sensitive to who is supporting different positions in the organization

- Recognize who will be benefited and who will lose

- Make sure the objective of the consulting exercise is clear and in the open

5. Provisions of support in gaining a critical resource

The consultant can offer the client business valuable support in gaining resources such
as: the goodwill of the customers, capital from investors, capital from the government
support agencies, people with particular skills and knowledge and specialist materials,
equipment and services by working with the client and developing a communication
strategy.

6. Facilitating organizational change

Organizations undergo change all the time. In response to this, change management
has developed as a specialist consulting area. The effective consultant must be aware of
the human dimensions to the change he or she is advocating and be competent in
addressing the issues it creates.

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 CHAPTER 4

Professional Attributes of Management Consultants

Professor J. Owen Cherrington of Brigham Young University enumerated

the professional attributes of consultants. He emphasized on his article that there
are three broad areas of skills that a management consultant must possess.
those skills are as follows:

I. Technical Skills
These include both understanding and experience in a technical discipline such as
information technology, marketing, engineering and organizational behavior.

II. Interpersonal Skills

These include personal attributes that make an individual amiable among people
and effective in accomplishing desirable objectives through people.

III. Consulting Process Skills

These involve the ability to understand and use the following approach in solving
business problems:

a) Identify the cause of problems or inefficiencies

b) Identify alternative solutions
c) Select the most desirable alternative, and;
d) Implement the chosen solution

TECHNICAL SKILLS

A. Technical Training
a) Length of Education
- a bachelors degree is a prerequisite and many, if not most people going
into management consultancy today have one or two graduate degrees.

b) Type of Education
- educational programs usually include a technical degree and a general
degree.

B. Common Core Requirement

1. Communications
2. Mathematics and statistics
3. Computer data processing

INTERPERSONA
L SKILLS

Intelligence the consultants degree of mental organization and

development that enables him/her to absorbs and relate facts in a logical and
orderly fashion and to reason inductively and deductively.
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Integrity fairness; equity; ability to distinguish right and wrong; freedom
from corrupting influence or practice; and strictness in the fulfillment of both
the letter and the spirit of agreements made regardless of personal
 Ambition the desire and motivation to earn and obtain full recognition for
the attainment of professional status

Psychological Maturity ability to view situations in perspective and to take

action needed on a calm and controlled basis without being diverted from a
sound, logical and ethical course by outside pressure

Physiological Equilibrium a hide-energy level to (1) support his/her

intellectual and emotional activities, (2) enable him/her to withstand pressure
and frustration, and (3) avoid physical illness

Relationship-building Skills - (SEE PAGE 4)

Project Management Skills - (SEE PAGE 5)
Analysis Skills - (SEE PAGE 5)

CONSULTING
PROCESS SKILLS

1. Problem Definition Phase fully describing the underlying problem. It begins

with the initial recognition of a symptom pointing to the problem and ends with
the complete description of the problem
2. Identification of Alternative Solutions - fact-finding and analysis phase
which involves gathering of facts needed to solve the problem and analyzing
these facts in order to clarify the requirements of the best solution.
3. Selection of most desirable alternative solution development phase, this
involves the selection of optimal solution to the problem and developing a
detailed plan of action
4. Presentation
5. Implementation Phase putting the detailed plan into operation.

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 Relationship-building Skills

a. An ability to build rapport and trust with the client

b. An ability to question effectively

c. An ability to communicate ideas succinctly and precisely

d. An ability to negotiate objectives and outcomes

e. An ability to convince through verbal, written and visual mediums

f. An ability to use information to make a case for a particular course of action

g. An ability to develop selling strategies

h. An ability to work effectively as a member of a team

i. An ability to listen effectively

1. Actively Concentrate on what is being said.

2. Keep track of, and mentally summarize, the key themes in what being
said

3. Keep an ear out for particularly relevant ideas or facts.

4. Identify and mentally record key phrases.

5. Note the speaker's use of metaphor and imagery.

6. Use your own paralanguage and body language to encourage the

speaker.

7. When appropriate, ask questions to explore key points further.

8. Summarize the speaker's points and ask him or her to confirm your
understanding.

9. If possible, support active listening with note tasking.

10. Avoid concentrating preparing your own response while the other
person is speaking.

j. An ability to demonstrate leadership

Project Management Skills

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 a. An ability to define objectives and outcomes

b. An ability to develop formal plans

c. An ability to sequence and prioritize tasks

d. An ability to manage the financial resources that are to be invested in

the in the consulting project

e. An ability to recognize the human expertise necessary to deliver the

project

f. An ability to manage

Analysis Skills

a. An ability to identify what information is available in a particular situation

b. An ability to identify what information needed in a particular situation

c. An ability to process that information to identify the important

relationships within it

d. An ability to draw meaning from that information and use it to support

decision-making

e. An ability to recognize the business's profile of strengths, weaknesses

and capabilities

f. An ability to recognize the opportunities and challenges the environment

offers the business

g. An ability to assess the business's Financial situation

h. An ability to evaluate the business's markets and how they are

developing

i. An ability to assess the business's internal conditions

j. An ability to analyze the way in which decision-making occurs within the

business

Common Barriers to Effective Communications

Between the Client and the Consultant

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1. Know-it-all Attitude and/or Prejudice of some personnel of client
- It is very likely that the consultant will encounter an individual who is a know-it-
all and anything that the consultant says will be probably rejected by this person.

Develop a cooperative and supportive climate and should

approach the person from his or her own perspective. Use
well-thought-out and logical reasoning that leads up to a
particular action.

2. Inability to understand technical language

- This may arise when the consultant interacts with a non-expert client and
employees.

Exercise care when using words that may be misunderstood

by the receiver and seek immediate feedback when
necessary in order to ensure that the meaning the receiver
gives to a technical word is what was intended by the
sender.

3. Inadequate background or knowledge

- This is closely related to technical language barriers. When dealing with clients
or client employees who have varied backgrounds and expertise, audience
analysis essential.

Consultant should have patience and empathy for the

receiver. Provide additional information and clarification
and be prepared to explain things more thoroughly to
individuals who need explanation for better understanding.

4. Resistance to change
- They have a natural tendency to resent change when it is perceived as a
threat to their work and this tendency can affect communication.

Seek the support of the client and its employees and encourage
their input regarding the proposed change. If change is
recommended, explain it in a positive manner to reduce their
anxieties.

20
5. Information overload
- Any individual has a limit when dealing with information and exceeding this
limit can hamper effective communication of information.

Guide clients by helping them manage their time, set priorities

and delegate work responsibilities to others. If an individual,
for the moment, appears to be overloaded with work, try not
to give additional assignment to him/her.

21
 CHAPTER 5

MAS PRACTICE STANDARDS AND ETHICAL CONSIDERATIONS

MAS Practice Standards

8 Standards the serves as Guidelines to all MAS Practitioners

1. Personal Characteristics. In performing Management Advisory Services, a practitioner

must act with integrity and objectivity and be independent in mental attitude.
2. Competence. Engagements are to be performed by a practitioner having competence in
the analytical approach and process, and in the technical subject matter under
consideration.
3. Due Care. Due professional care is to be exercised in the performance of Management
Advisory Services.
4. Client Benefit. Before accepting an engagement, a practitioner is to notify the client of
any reservations he has regarding anticipated benefits.
5. Understanding with client. Before undertaking an engagement, a practitioner is to
inform his client of all significant matters related to the engagement.
6. Planning, Supervision and Control. Engagements are to be adequately planned,
supervised and controlled.
7. Sufficient Relevant Data. Sufficient relevant data is to be obtained, documented and
evaluated in developing conclusions and recommendations.
8. Communication of Results. All significant matters relating to the result of the
engagement are to be communicated to the client.

Standard No. 1. Personal Characteristics

In performing Management Advisory Services, a practitioner must act with integrity and
objectivity and be independent in mental attitude.

Integrity. As defined by Webster it refers to the quality or date of being sound moral principles,
honesty and sincerity. It therefore ensures the practitioners statements of findings and
recommendations are free of intentional distortions or misstatements.

Objectivity. It is the ability to avoid bias and to maintain an impartial attitude on all matters
under review.

Independent mental attitude. There is independence in mental attitude when the CPA maintains
his role as an objective researcher, analyst or adviser and does not consider himself as
part of the management by taking on the role of decision maker. A practitioner may
undertake ONLY those engagements in which he can maintain an independent mental
attitude.

Standard No. 2 Competence

Engagements are to be performed by a practitioner having competence in the analytical

approach and process, and in the technical subject matter under consideration.

Competence in MAS may be classified into two namely:

1. Competence in Professional Work.

It involves:
a. technical qualifications of the practitioner

22
 b. the ability to supervise personnel assigned, to evaluate the quality of work
performed, and to
accept responsibility to the client for successful completion of the engagement.

2. Competence in performing Management Advisory Services.

This refers to the ability to identify and define client needs, to utilize analytical approach
and process, to apply knowledge of the technical subject matter under consideration, to
communicate recommendation effectively, and to assist in implementing the
recommendations.

Competence is acquired and maintained through a combination of educations and experience.

Education, beyond that which is initially required for admission to the profession, includes
formal and informal instruction and self-study. Experience relates to the knowledge and
judgment acquires by personal participation in management advisory services engagements and
other business affairs.

Standard No. 3 Due Care

Due professional care is to be exercised in the performance of Management Advisory Services.

The concept of due care is concerned with what the practitioner does and how he does it. It
involves diligence and appropriate attention in carrying out the assignment. It does require
systematic critical review by the practitioner, throughout the engagement of work accomplished
and judgment exercised. Due professional care requires that all work be done within the
provisions of the Code of Professional Ethics and other Professional Standards for CPAs

Standard No. 4 Client Benefit

Before accepting an engagement, a practitioner is to notify the client of any reservations he has
regarding anticipated benefits.

Problem definition, identification of objectives and benefits derived, and the clients willingness
to accept recommendation and his ability to implement them should be considered by the
practitioner in structuring a MAS engagement. The client should be informed of significant
changes in anticipated benefits and costs that may occur during the course of the engagement.
In some cases wherein the potential benefits are obvious to the client and to the practitioner,
their reasonableness is often determined by exploratory work and exercise of judgment. Some
benefits can be quantified while others are less tangible. The realization of potential benefits
would be impaired should the client be unwilling to accept the recommendations or lack the
ability to implement them.

Standard No. 5 Understanding with Client

Before undertaking an engagement, a practitioner is to inform his client of all significant matters
related to the engagement.

The significant matters related to an engagement generally include:

a. the Engagements Objectives
b. the Scope
c. the Approach
d. the Role of all Personnel
e. the Manner in which Results are to be Communicated
f. the Timetable
g. the Fee

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A preliminary discussion or investigation is generally necessary to develop sufficient
information for formulating engagement objectives and identifying scope. The engagement
objectives reflects the result expected to be derived. There should be a clear expression by the
practitioner as to both the engagement objectives and the extent and nature of the
practitioners involvement.

Engagement scope should be broad enough to encompass matters likely to be significant in

developing appropriate recommendations and producing desired results. Particular attention
should be given to inform the client of possible consequences of significant constraints.

The respective roles and responsibilities of the practitioner and the client should be defined.
Where a third party is involved, it is especially important to establish where party the
practitioner orthe client assumes responsibility for third party performance. Definition of major
task to be performed, the methods to be used in reporting engagement status and
achievements, and the timing of such reporting should be establish. There should be establish.
There should be a clear statement as to the content of the end product.

There should be an expression of when work will commence, the estimated completion date,
and the fee and expense arrangements. These matters should be recorded in writing particularly
for engagements of significant duration or complexity. This can be done in a formal contract,in a
letter of understanding or in a file memorandum summarizing the terms of un oral agreement
with the client.shoulda significant aspect of the engagement change as work progress,there
should be a new arrangement with the client and a writtem record thereof.

Planning, Supervision,and Control

Standard No.6. Engagements are to be adequately planned, supervised and controlled.

Planning,supervision and control are based directly on the practitioners understanding with the
client as to the engagement and as to the role of all personnel concerned.

Planning

Planning is the translation of engagement objectives into a structured set of activities and
events within a targeted time schedule. The resultant engagement plan is to eb used
insupervising and controlling the engagement.

Engagement must be performed and supervised by competent personnel. The practitioner in

charge must exercise judgement as to the appropriate amount of supervision, based on the
experience of the persons involved and complexity of the engagement.

Control

Effective control requires measurement of progress in meeting the engagement plan and
objectives. Adequate documentation should be maintained to permit measurement and
assessment of progress at significant engagement points.

24
Sufficient Relevant Data

Standard No.7. Sufficient relevant data is to be obtained, documented and evaluated in

developing conclusions and recommendations.

A practitioner must exercise his professional judgement in determining the type and amount of
data required. Such determinations take into considerations the nature and scope of the
engagement and related circumstances. The source and reliability of the data, and any
limitations with respect thereto; must be considered informulating conclusions.

The amount and formality of documentation will vary according to the nature and scope of the
engagement. The documentation should demonstrate that due care has been exercised. It
should record, as appropriate (a) the evidential matter obtained and its sources, (b) the
alternatives considered and (c) the analytical process leading to specific recommendations.

Communications of Results

Standard No.8. All significant matters relating to the results of engagement are to be
communicated to the client.

The principal findings, recommendations, and accomplishments, and the major assumptions
relied upon, should be conveyed to the client, together with any limitations, reservations, or
other qualifications.

Report to the client may be written or oral. When a practitioner does not issue a written report
to the client, he should prepare a file memorandum documenting the significant
recommendations and other pertinent information discussed with the client.

Interim Communications

Interim communications are desirable. Interim communication encourages the involvement of

management, helps preserve managements role as decision-maker, and keep management
informed of progress towads the final conclusions, recommendations, and accomplishments.

Interim communications should normally summarize (a) findings to date, (b) work accomplished
in relation to plan, and (c) when appropriate , tentative recommendations. They are also used to
review problems encountered, to obtain management decision, and reaccess priorities.

Final Report

A final report should be made to the client upon completion of the engagement to ensure the
results and recommendations are communicated. Reports should be responsive to the
objectives and scope of the engagement. The nature of work performed and the extent of
interim communications will influence the degree of detail of the final report.

Ethical Considerations

Code of Ethicsfor Professional Accountants in the Phillipines Relavant to Management

Consultancy Services

25
Professional accountants are defined in the Code of Ethics are those persons who hold a valid
certificate issued by the Board of Accountancy (i.e., Certificate Public Accountants), whether
they be in public practice, (including a sole proprietorship or partnership), industry, commerce,
the public sector or education.

The following provisions in the Revised Code of Ethics for Professional Accountants in the
Philippines are considered applicable and relevant in providing Management Consultancy
services which are among the non assurance services of professional accountants.

PART A

Section 100.1 of the Revised Code provides for the following:

A distinguishing mark of the accountancy is its acceptance of the responsibility to act in

the public interest. Therefore, a professional accountants responsibility is not exclusively to
satisfy the needs of an individual client or employer. In acting in the public interest a professional
accountant should observe and comply with the ethical requirement of this Code.

Section 100.4 describes the Fundamental Principles that every professional accountant, whether
he/she be in public practice, private industry, academe or government services must observe.

A professional accountant is required to comply with the following fundamental principles;

Integrity

The principle of integrity an obligation on all professional accountants to be

straightforward and honest in professional and business relationships. Integrity
also implies fair dealing and truthfulness.
A professional accountants should not be associated with reports, returns,
communications or other information where they believe that the information
(a) Contains a materially false or misleading statement;
(b) Contains statements or informations furnished recklessly; or
(c) Omits or obscures information required to be included where such
omission or obscurity would be misleading.
A professional accountant will not be considered to be breach of paragraph
110.2 if the professional accountant provides a modified report in respect of a
matter contained in paragraph 110.2
Objectivity
A professional accountant should not allow bias, conflict of interest or undue
influence of others to override professional or business judgements. He should not
compromise their professional or business judgement because of bias, conflict of interest
or the undue influence of others.

Professional Competence and Due Care

A professional accountant has a continuing duty to maintain professional
knowledge and skill and act diligently and in accordance with applicable technical and
professional standards. He should attain and maintain his professional competence.

Confidentiality
A professional accountant should not disclose any such information to third
parties without proper and specific authority unless there is a legal or professional right or
duty to disclose

Professional Behavior

26
 A professional accountant should comply with relevant flaws and regulations and
should avoid any action that discredits the profession. He should not bring the profession
into disrepute in marketing and promoting his self and his work.

Code of Ethics for Management Consultants

Code of Conduct for management consultants represents the attitude, principles
and approaches that have been found to contribute most to success and make for
equitable and satisfactory client relationship.

I. Basic Responsibilities of Management Consultants

Integrity and Objectivity
Any personal interest and other events or special relationship must be eliminated
in order to achieve integrity and dont intentionally misinterpret facts to your advantage.

Independence
The consultant must be away from the influence of the enterprise served. Because
there must be integrity in the rendered service. And do not serve different enterprise at
the same time without knowing from each client.

Confidential Information
The only time that the information must be disclosed is by the consent of the
client. Keeping the information makes a good relationship with client. Disclosing
information for you own interest results in service without integrity.

II. Practice Standards for Management Consultants

Professional Competence
Do not take any engagements that will be not completed by your present
professional competence.

Planning, Supervision, and Due Care

Serve the enterprises with due care, from gathering data to drawing conclusion
and giving recommendation with supervision and must be beneficial to the enterprise.

Reporting Results
Give conclusion with professional judgement and develop realistic
recommendations to help the client improve the enterprise.

III. Fee Structure Standards for Management Consultants

Fees charged from the client must be reasonable with the basis of the service
performed, the time required to complete, benefits of the clients and experience of the
consultant. Any fees charged without reasonableness will result into a conflict of interest

IV. Business-Conduct Standards for Management Consultants

Conserve the profession by continuous advancing the standards by sharing and
discussing techniques with other consultants. Protecting it by avoiding engagements
without integrity and independence.

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 CHAPTER 6

Organization and Management of MAS Practice

Developing MAS Practice

If one wishes to be a consultant, he must first assess his own talents and expertise.
In addition, one needs to review his communication skills, both oral and written; sales
ability; to focus on a project and carry it to conclusion and ability to maintain objectivity.
One must also evaluate his business and professional judgment.

The scope of consulting practice is defined by the expertise and experience of the
consultant within the practice. This can be technical consulting in

a) Industrial management
b) Engineering
c) Marketing
d) Business management, or
e) Financial areas

To be successful, it is extremely important to recognize the firms background and

expertise so that the scope of the consulting practice can be well defined for proper
communication to the potential clients. The firm should not over sell these abilities or
accept work outside the firms capabilities.

Prior to entering into a consulting practice, the prospective consultant should conduct
market research to identify opportunities in the marketplace.

This will specifically involve:

a) Study of the listings of management consultants

b) Survey of local CPA firms to determine which are offering consulting services
c) Determination of possible oversaturation of consultants in ones specialty area
d) Identification of new services that may provide a competitive edge

Although economic statistics and financial information concerning consulting

practices are not readily available, most of this information may be obtained from word of
mouth discussions with other consultants and knowledge of the local marketplace.

Quite frequently, a consultant gets started when his clients indicate that they would
like to use his talents as consultant. This limited number of clients will provide a sufficient
base for the individual to get started and maybe even keep busy started on a full-time
basis.

In any case, a practice development program needs to be initiated to target potential

clients. Market research is important both for the new firm and established consulting

28
practice. Every practice needs to have a continual flow of work and steady stream of
new opportunities and new contracts. Some effort has to be made to reach out, contact
potential clients and make them aware of ones consulting services.

Equipped with necessary information, one needs to establish an operating plan for
the practice that is, to set goals and objectives. These goals and objectives should
include:

a) A desired income level

b) Potential clients, and
c) Strategies to obtain those clients

Based on the services one proposes to provide, the types of potential clients that
could benefit from those services and the potential amount of work, the practitioner
can now identify staffing requirements and financing needs.

To develop a meaningful and worthwhile network, the practitioner must establish

quality contacts and educate the network as to the type of the type of services he
offers.

If one has built a quality network, some contacts will continually refer work to the
practitioner. These productive contacts develop and grow based a solid personal
relationship and the consultants commitment to providing excellent service.

Building a successful network requires keeping the practitioners name in front of

clients and contacts. This can be done through client newsletter, articles, seminars,
entertainment or even periodic phone calls. In any event, theres a need to be
consistent, intermittent reminders to the network about the consultancy firm and
services.

ORGANIZATION OF MAS DIVISION

Management advisory services of an accounting firm may be rendered by a man

who is primarily an accountant or be a specialist. A firm with large clients may find it
necessary to train some of its accountants as specialist in MAS or to engage men with
experience and training in engineering, marketing, economics, EDP, psychology, etc. a
consulting firm should periodically assess its needs with respect to in-house knowledge
and skills. Upon comparing the knowledge and skills held by its current consultants
against its needs, the firm can determine the extent of its deficiencies. Should such
deficiencies exist; a consulting firm can apply these approaches:

1) It can employ additional consultant with adequate knowledge and skills or

2) It can undertake a variety of staff development activities that are intended to
endow the presently employed consultant with needed knowledge and skills

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Staff pyramid and fee structures

A simple approach in staffing a consulting practice is to break the practice into

pyramid of from 5 to 15 people. Depending upon the practice specialty and the particular
firms philosophy, the size but usually not the structure of the pyramid may vary.

Each pyramid is build around a partner, principal or director. In large practice, there will
be multiple pyramids. The numbers in the pyramid refer to the typical number of
personnel at each level

Partners, principals, directors

The top of the pyramid contains the partner, principal or director. This individual
is typically the most experienced highly paid professional and is normally responsible for
the successful completion of engagements, dealing directly with clients and selling work.

Principal activities of partners include performing practice planning, administering and

developing practice, consulting with top-client managers, approving engagement reports,
and managing client crises.

On certain occasions, a consulting firm may determine that its practice requires
additional strength at the partner level. One such occasion could arise if the gap
between services to be offered, and the ability to offer them, is so great that recruitment
at lower levels cannot be expected to produce the desired results.

In the event that a new partner is to be recruited, the principal consideration must be the
external reputation of the candidate as highly competent consultant. The firm should
proceed cautiously, since the recruiting process is extremely involved. In addition to the
candidates reputation, for competency, the recruiting firm should consider his or her
probable (1) remaining period of useful and productive service to the practice and (2)
compatibility with the existing practice and current partners.

Senior Managers, Managers, Supervisors

The next tier of the pyramid is made up of senior managers, managers, and supervisors.
These individuals perform week-to-week management of the engagements and are
responsible for identifying new client prospects and assisting in the sales process.
Principal activities include planning, engagement, evaluating consultants, supervising
consultants, writing proposals, reviewing working papers and reports, consulting with
client managers, and serves as expert in one or more applied knowledge areas.

30
May consulting firms recruit for their practices mainly at the manager classification level.
Their reasoning is that a manager is likely to be of worth from the beginning, since his or
her personal competence will usually determine the success of individual engagements.
A firm that intends to recruit a manager will probably seek the following attributes:

1) Previous successful consulting experience

2) Previous successful middle and top management experience
3) Specialized or advanced knowledge in major areas where the recruiting firms
practice has identified needs

Senior consultants, Senior

The third tier of the pyramid is made up of senior or senior consultants. These
individuals typically have 2 or 3 years of consulting experience and are capable of
supervising daily work of the younger staff. They possess the right combination of the
experience and dedication to complete different projects with limited supervision.
Seniors are normally in short supply in most firms.

Associate Consultant, Staff

The final layer of the pyramid consists of young or new staff. Depending upon the firm,
these individuals usually have less than 2 years of consulting experience and may have
been hired directly out of graduate or undergraduate school. Some firms require prior
business experience, while others prefer to train their own personnel and hire some
undergraduate students.

Billing Rates

The typical range of billing rates of the engagement team members in a medium-sized
consultancy firm with the four pyramid levels are as follows:

Level 1 P10,000 to P20,000 per hour

2 P8,000 to P10,000 per hour

3 P5,000 to P8,000 per hour

4 P2,000 to P5,000 per hour

These billing rates are normally adjusted annually when promotions are given and
salaries are changed. Within each pyramid level there may also be multiple billing codes
relating to salary and experience levels

31
Defining the Target Level of Competence of Management Consultants

Consulting competence is the ability of a consultant (e.g. management practitioner with

an accounting background) to deliver specific agreed-upon consulting services to client
on a profitable time-and-fee basis observing professional standards.

The four major factors that must be considered when defining the target level of
competence are

1) Scope of Practice Area

2) Service Variety
3) Client Requirements
4) Service Delivery Capability

Scope of Practice Area

A consultant who desires to grow should take the following steps:

1) Review the economic region in which the consulting firm draws, or expects to
draw, most of its clients.
2) Inventory the services required by the existing client, and in most cases, by the
clients the consultant would like to add (e.g. related to audits, reviews, and tax
planning)
3) Select services from this inventory that will be provided
4) Acquire the competence needed to provide the selected services
5) Notify clients and potential clients that the consulting firm is able and willing to
perform the selected advisory and consulting services

Service Variety

The range of services that consultants typically provide is extremely broad. Most
engagements, however, would fall into one of the following categories:

1) Planning, control and reporting system

2) Operational computer system analysis, design, implementation and evaluation
3) Specialized technical services such as advice on new laws, entering new
markets or keeping abreast of new economic and technical development.
Specific services such as acquisition, mergers, divestitures, economic and
feasibility studies, management audits, market analysis, etc. , might also fall into
this category.

Client Requirements

In reviewing client requirement, the consultant may assess the following questions:

32
 1) Will a fully implemented service (eg system or recommendation) be turned over
to the client ready for use? If so, these services will require more care,
organization and attention to detail than other services.
2) Will the service require changes or adaptation? If so, the client must be told
explicitly what to do in order to realize the service benefits
3) Does the client belong to the industry with special characteristics or problems? If
so, the service must be designed to produce satisfaction in such situation
4) Does the client have special financial or growth problems? If so, the service
should not aggravate these problems or be ineffective in their presence.

Service Delivery Capability

Service delivery is the application of consulting skill and without this, even high levels of
knowledge and understanding cannot be put to effective use for clients.

In delivery services, the consultant undergoes the following phases:

1) Setting objective, identifying problems and needed services, predicting specific

expected benefits from these services for these services, and gathering essential
facts pertaining to the problem and means of delivering the services.
2) Adapting and beginning the services, those are to be the principal deliverables
from the engagement.
3) Implementing these services to the clients satisfaction
4) Evaluating the results in operation, in order to determine the extent to which the
anticipated benefits were received from the services.

MANAGEMENT OF MAS PRACTICE

Steps in starting the MAS Practice

CPAs have been providing management with advice and technical assistance as long as
the accounting profession has existed. But as businesses grew in size and complexity,
the demands of clients for outside professional help also increased significantly. A
number of accounting firms realized that they now have to offer management services
on a systematic, organized basis.

A CPA who would want to start the MAS practice formally may follow these suggested
steps:

1) Determine and make list of services that one can truly offer with a confidence of
competence to perform
2) Review a client list classified by industry, size, etc. and prepare a package
tailored to fit the firms competence and a particular type of clientele. Initial
package usually consists of services that are closest to the conventional

33
 accounting function such as budgeting, financial planning situation analysis
(mergers, make or buy decisions, etc,) cost systems and studies and system
design and installation, office management and equipment.
3) Prepare a line-up of MAS personnel. In the selection of the staff, the following
sources may be considered:
a. Accounting firms own staff (usually audit staff men who had lost interest
in the audit work but who have the technical qualifications, personalities
to do MAS work)
b. Experienced specialists (engineers, management consultants) from
outside the firm either on a full-time and permanent basis or part time
basis
c. Referral by other CPAs
4) Seek out advisory engagements

This, of course, should be done within the bounds of the Code of Ethics. Leads to
management advisory clients can come from an outright request for advice by
the client to a rumor that a business is in trouble. The CPA can capitalize on his
audit and tax engagement. Mention can also be made of the CPAs availability
for MAS work in his audit letter of engagement. Use of letters and brochures to
inform present clientele is also allowed.

The basic characteristics and qualifications of a CPA firm form a sound basis for
the development of the management advisory services portion of the CPAs
practice. The CPAs review of the many aspects of an organizations operations
gives him the opportunity to know the weaknesses and strength of the business
firm. This is the reason why members of the business community seek his advice
on business matters.

Sources of MAS engagements

The primary source of MAS engagements in the audit client of the CPA. In the
course of his examination of a clients financial statements, the CPAs reviews
many aspects of an organizations activities and procedures thereby obtains first
hand knowledge of the problems confronting management. The CPA may
therefore be engaged by the audit client to conduct a more thorough and in-depth
analysis of the problem and to make constructive suggestions to solve the
problem and improve the operation of the company. Other possible sources of
MAS clients are:

a) Referrals from other CPAs

b) Referrals from audit clients
c) Referrals from businessmen

34
 d) Referrals from financial and government institutions
e) Referrals from legal and other professional firms

Determining Market Opportunities

In determining market opportunities and identifying potential clients with accuracy and
success, the professional consultant must be very certain of his/her area(s) of
specialization.

The following matters have to be considered carefully by the consultant:

1) The specific talents, skills and attributes and the market that is suited to these
abilities
2) These spectrum of opportunities to apply to the services in vertical and horizontal
markets both in public and private sector
3) Consulting opportunities can be created by political, economic and social
changes affecting ones area of expertise and interest

A brief overview of the possibility of market opportunities in the private and public sector
is discussed in this section.

1. Private Sector
a. Individuals
Individuals hire consultants to seek advice on how to save money or how
to make money. The consultants target market is anyone in the higher
earning bracket including executives and professionals. Some examples
of consultants in this area are tax consultants, internal consultants and
real estate consultants.

b. Small businesses
For a new consultant, small businesses provide an excellent client base.
The failure rate of small businesses is very high which is oftentimes
caused by the small business owner/operators lack of knowledge in
important areas of small business management. If the consultants skills
include small business management and making, raising and saving
money in a business, he/she can find a market.

c. Medium-sized businesses
These are constantly going through various stages of growth with all the
predictable problems involved. These companies often hire experts who
can assist them in identifying, analyzing and finding solution to their
problems, instead of hiring staff. Hiring staff involves the related costs of
training benefit packages and long-term commitments for possibly short-
term needs.

35
 d. Large companies
It is more difficult to obtain contracts from larger companies because
large companies prefer dealing with large consulting firms or well-known
consultants with considerable experience an contracts. Because of the
money available in larger businesses, consulting opportunity exist
particularly in the area of technical assistance.

2. Public Sector
a. Government
One of the major users of consulting services is the government. A
consultant can submit a solicited or unsolicited proposal and attempt to
get the contract directly. An additional way of making money through
government is a grants consultant assisting organizations or businesses
to obtain grants and subsidiaries.

The following are some steps that a consultant may take to obtain
necessary information and make the necessary contracts with
government.
Read government advertisements and publications related to your
area of interest
Place your name on the government mailing list. Request the
government agency to include your name on the list to receive all
relevant information including proposed procurements and contracts
awarded relating to your field.
Contact government contract officers
Submit your resume to various government departments and
introduce yourself to the person in charge of approving contracts
Contact large consulting firms and other companies that have
received government contracts and might require additional consulting
assistance for those contracts
Contact friends and acquaintances who work in government and
inform them that you are looking for consulting assignments in your
specialty.

3. Grant Consulting
A grants consultant attempts to obtain grants, loans or subsidiaries for a client.
The national government and its various agencies award large sums of money to
eligible applicants.

The consultant identifies the specific needs of an organization or company and

advices them of the availability of government funds. He performs the analysis,

36
 collects all the necessary detail for documentation and prepares the application
for signature by an authorized representative of the organization or company.

The consultant could also be responsible for coordinating the implementation of

the program in which the funding was based, if applicable. The consultant
normally takes an administration fee which is a negotiated percentage of the
amount awarded which is based on performance only and paid from the funds
received.

Problem Areas in Rendering MAS by an Independent Accounting

Firm
The potential problem areas that may arise in connection with rendering MAS by
an independent accounting firm are:

1. Questions as to the effect of the practice of MAS on the firms independence.

Agreement should be reached as to the relationship that MAS work will have
on audit work. It is important to remember that decision making is the
responsibility of the clients management and the MAS mans function is
solely advisory. The principle of the independence that applies to an audit
engagement also applies in practice of MAS.
2. Development and maintenance of a high level of competence in MAS. A
policy should be established for resolving the problem in the event of
disagreement between a MAS partner and an audit partner as to whether
appropriate competence exists in the firm. Also, provisions for the staffs
continuing education program should be made.
3. Questions of what fee to charge. A clear policy should be established with
respect to the fee structure and the reasoning behind the same should be
understood by the entire firm.
4. Questions of AUDIT-MAS cooperation in obtaining engagements. Efforts to
be made to obtain MAS engagements and the cooperation to be expected of
audit partners and staff should be clearly defined.
5. Questions of regular communication between the MAS function and the rest
of the firm

Financial Management of a MAS practice

A consulting practice is a business and, like all businesses, must have financing.
Financing can be provided by capital invested by you or the initial group of consultants
or by funds borrowed from banks and others. The following are the initial and basic
capital requirements

37
1) Working capital requirements
This will be used to pay monthly operating expenses such as salaries of
consultants, rents, supplies, utilities, secretarial services and etc. this will be
needed to fund accounts receivable that present time billings to client. It is
prudent to have working capital for at least three to four months expenses. Also,
many consultants obtain retainers at the beginning of a consulting assignment to
help finance the burden of monthly expense. Care, however, should be exercised
to avoid financial trap where funds are received and spent before the work is
actually performed.
2) Office facilities and equipment requirements
Since consultancy is a business activity, this means that the consultant should
establish a professional and businesslike image for the basic business operation
through stationery utilized, telephone answering procedures employed, and
quality of typed material that is presented to client. A practical option for a startup
firm is leasing an office in a professional suite that provide many facilities
including secretarial service, copy machine, telephone answering, etc.

As the practice grows, the next step is leasing office furniture, employing
permanent secretary/receptionist, multiple employees and other consultants.
Each of these steps requires a business decision as to the availability of the
practice and the capacity to handle the additional overhead expenses.

Of prime concern to ones consulting practice are the costs of operation and cost
of equipment and facility requirement because they have a long term impact on
the practice profitability.

Revenues and Expenses of Management Consultants

Et service fees represent the peso value of what has been sold to the client or
wht will be received as revenue. If the staff is fully utilized or there is 100%
professionals time chargeable to a client engagement, it could mean a very
profitable operation. Net service fees are determined by subtracting from the
gross fees (total chargeable hours worked by a professional times his billing rate)
the allowance, fee adjustment or write off. The allowance percentage is normally
in the 12% to 16% range and would ultimately depend on effective use of the
staff.

Billings and Collection

One of the most important considerations in a consultancy practice is how
professional fees are to be established. Some consultants bill services on an
hourly basis, while some on a daily basis or per diem basis. Some consultants
add out-of-pocket expenses directly chargeable to the client to the bill while
others absorb their expenses. Staff billing rate are often a multiple of the salary

38
 paid to the employee. Multiples of, 2.5, 3 and 3.5, the actual hourly rate of ay, are
very common.

Another billing approach is on a project basis. Here the fee is determined for the
project and the work is completed with a reasonable time. No matter what the
method of billing, time keeping is of prime importance.

There should also be an appropriate mix between practice development and

productive chargeable time.

Follow-up on unpaid invoices is important. Statements should be sent as a

reminder of outstanding invoices. Aggressive invoice collection is important to
cash flow and survival of the practice.

Illustrative income statement of a small consulting practice that shows the normal
sources of revenues and expenses

AFC Consultancy Services

Income Statement
For the year ended 2014

Gross services Pxx

Less: allowance xx
Net Services Pxx
Direct Operating Expenses
Professional staff salary and bonus xx
Office staff salary and bonus xx
Other direct expenses (supplies, travels) xx
Total xx
Contribution to General Overhead Pxx
Less: General Overhead
Pensions' xx
Group life and medical Insurance xx
Rent xx
Depreciation and Amortization xx
Stationery and office supplies xx
Subscription and services xx
Staff training and education expense xx
Professional membership dues xx
Interest xx
Taxes xx
Other Administrative expenses xx
Total xx
NET INCOME Pxx

Preparing a Business Plan for MAS Practice

39
Why Prepare a Plan

Most consultants prefer to be a consultant first and a business owner second. But
planning and good management skills are vital to business success. Those why do not
plan run a very high risk of failure.

A business plan is written summary of what the consultant hopes to accomplish by

being in a business and how to organize the resources to meet his goals.

Having clear goals and well-written plan aid in decision making. With a business plan,
the consultant has some basis and a standard comparison to use in evaluating
alternatives presented to him.

A business plan establishes the amount of financing or outside investment required and
when it is needed. It makes it much easier for a lender or investor to assess the
consultants financing proposal

Format

The business plan format normally consists of four parts; introduction, business
concept, financial plan, and the appendix.

The plan starts with an introductory page highlighting the business plan

The business concept which begins with the description of the industry, identifies the
consultants market potential within the industry and outlines the action plan for the
coming year.

The financial plan outlines the level of present financing and identifies the financing
sought. This section be brief. The financial plan contains pro forma financial forecasts.
These forecasts are a projection into the future based on current information and
assumptions. The

The appendix section contains all the items that do not naturally fall elsewhere in the
document, or which expand further on the summaries in the document. These might
include a personal net worth statement and a statement of accounts receivable

40
 CHAPTER 7

Stages of Management Consulting Engagement Part 1

I. Negotiating the engagement
II. Engagement planning
III. Conducting a consulting assignment
A. Problem identification and solution
B. Identification of suitable and accurate sources of information
C. Data analysis and diagnosis
D. Solution development
E. Preparation and presentation of the report and recommended solution
F. Implementation
G. Follow-up evaluation of the implemented solution
IV. Evaluating the engagement and post-engagement follow-up

I. Negotiating the engagement

where the CPA and the client discuss the proposed professional consulting services
the client decides whether or not to engage the CPA and the CPA decides whether
or not accept the assignment
The CPA only accepts a work that can be successfully undertaken.
These are the steps necessary to assess the work:
a. Ascertain the real problem and what is required to reach a solution.
b. Identify the end product of the assignment.
c. Agree on the role to be performed by the CPA.
d. Agree on the basis for establishing and billing fees.
e. Confirm understanding in writing.

Proposal Letter a written communication between the CPA and the Client setting
forth the terms and conditions of the proposed consultancy work.

Purposes:

a. Minimize understanding
b. Assist better administration

Content:

1. Objectives and benefits of the engagement

Describe clearly and establish the benefits to be derived
2. Scope of the work and the role of the CPA
The extent of work to be done and the degree of participation, joint or
individual, of client and CPA
3. Approach to the study
The client should understand how the work will be undertaken and the specific
approaches such as:
a. Data gathering methods
b. Flowcharting and documentation testing

41
 c. Extent of use of mathematical methods
d. Order in which the various phases of the project are to be undertaken
4. Project organization
Specify how the CPA and the client are to be assigned and organized;
And what working relationship between them, the following must be specified:
a. Functions and responsibilities
b. Number and types of personnel
5. Fees and billing arrangement
Fee estimate, frequency of interim, final billing and method of billing
Factors to be considered in setting the fee to be charged:
a. Nature of MAS job
b. Jobs degree of difficulty and complexity
c. Qualifications of the staff required
d. Time involved
e. Technical importance of the service to the client
6. Firm Qualifications, where appropriate.

II. Engagement planning

Engagement Program or Work Plan an operational plan for conducting a
management service engagement.
Contents
a. Objectives and description of each task to be accomplished
b. Description of tangible output required at completion of each task
c. A list manpower required
d. A list of personnel assigned
e. Starting and completion dates
f. Project costs
Objectives
a. Provide a means for arranging, distributing, and assigning responsibility for
various segments of an engagement
b. Provide a means of control for determining whether all segments of the
engagement have in fact been completed.
c. Provide the framework for reporting progress of an engagement
d. Facilitate time and efficiency control over personnel assigned to the
engagement
e. Assist in an engagement review by a partner or supervisor
f. Provide the basis for estimating fees.

III. Conducting a consulting assignment

Stages of a Problem-Solving Process
A. Problem identification and desired outcome
A problem is said to exist when Human awareness of the problem
the observed behavior of system factors
Predefinition of the allowable tolerances
or process violates the bounds of
reasonable expectations Recognition of the established standards

42
Problem Definition Phase

1. Identify the problem.

2 procedures:
a. Problem finding - involves the identification of the:
Reasonable explanations pertaining to a system or process; and
Allowable tolerance from these reasonable expectations
b. Problem stating involves the formulation of a comprehensive and valid
statement
The final statement of the problem should contain:
The objectives to be achieved by the solution to the problem;
The problems scope, intensity, time dimensions and location;
The human elements involved in the problem;
The support system and tracking systems related to the problem
solution; and
The institutional process for managing the problem

Consultant must be aware of and avoid possible pitfalls in identifying the

problem such as:

Mistaking symptoms for the underlying problem

Accepting without question the opinions of others concerning the
problem
Assuming that the problem is a person rather than the behavior or
nonbehavior of people
Overlooking the milticausality of problem.

2. Objectives of the problem-solving process

- Desired outcome is generally the objective of the problem-solving process
- Should be permanently expressed in the problem definition statement
- Typical objectives pertaining to systems and processes in business entities are
concerned with Performance, Efficiency, Economy, Control, Security or
Availability of information

3. Scope of the problem

- Suggest the extent of the needed response or solution to the problems
- It might also point to the need for repackaging the consulting engagement

4. Intensity of the problem

- The degree of difficulty or adverse effects they bring to the interested parties
- Determine the relative urgency and importance of initiating a particular
problem-solving process

5. Time dimension of the problem

43
 - How long has the problem existed?
- How much longer is the problem likely to continue if left unsolved?
- How often is the problem likely to occur in the future?

6. Location of the problem

- Location, or focus, of the problem is the geographic point or points where it
occurs.

7. Human elements involved in the problem

- Attitude of involved managers and employees
- Personal traits of involved managers and employees
- Training of involved managers and employees
- Tenure of involved managers and employees

8. Support system surrounding the problem

9. Tracking system related to the problem

-often detects a problem
10. Institutional process for managing the problem
B. Identification of suitable and accurate sources of information
Facts
- Help the consultant in sorting out client symptoms from client problems as
well in structuring and organizing the problems.
- Form the foundation for prospective solutions and direct the consultant to the
solution ultimately recorded

Internal Sources of Facts External Sources of Facts

Sources Facts Sources Facts
Corporate Corporate objectives Industry Corporate data and analysis
Planning Expansion Plans Reports Industry news
Sales Statistics Competition Products and product literature
Invoices and back orders Market conditions
Types of new products or
Distributors
services with market Customer analysis
possibilities
Customer response to existing
Marketing Profile facts
products
Customers
Planning and promotional
Sales
campaigns
Feedback from customers and
Corporate statistical
sales force on product
comparisons
performance
Research and New product development
Statistical Economic/ financial data
Development schedules
data and
Engineering schedule for Securities and Exchange
Engineering abstracts
products Commission facts
Systems for organizing files
Data
and reporting operating Department of Commerce facts
Processing
results
44
 Product, market, and industry
Background on employees Data base
news and analysis
Personnel retrieval
Salary/ performance review
systems Economic Forecasts
data
Product pricing and costing
Accounting
Operating expenses
Internal Sources
1. People most important source of facts
2. Client documentations second important source of facts
How the organization is structures?
What the organization has been doing?
What the organization plans to do?
3. Relationships relationships among people, departments, and functions can
provide information and insights unknown or undocumented anywhere else
within the organization
External Sources
Facts-Gathering Techniques
1. Interviews
- Series of interviews with client personnel is considered the best way to zero in
on problems
- Can be conducted to all levels of the organization
2. Questionnaires
- Best used when the persons from whom the consultant wants information are
physically removed and travel is prohibited or when numerous are to be
asked and the facts to be so determined are verifiable from other sources.
3. Observation
- Observing the employees of a client perform their job-related duties
- Useful in gathering facts prior to an interview, in verifying statements made
during an interview, and in ascertaining relationships between individuals
4. Documentation gathering
- Collect all relevant documents
- Can gain an understanding of what is presently done and how it is organized,
what is not available, and perhaps what the client considers to be important
5. Charting
- Provides a pictorial representation of dimension of the clients organization or
of its activities
- Facilitates analysis, synthesis communication, and documentation
a. Organizational chart
- Useful to prepare a brief narrative describing the functions and role of
each manager appearing on the organization chart
b. Data flow diagram
- Logical view of data flows through the system
c. System outflow
- Depicts an overall view of a system in terms of major elements
- Provides clear documentation of either a present system or a proposed
system.
d. Detail flowchart

45
 - Graphically represents the logic of a process
e. Decision table
- Facilitates the understanding and communication of decision processes
having complex logic

C. Data analysis and diagnosis

1. Decision-Level Analysis
Has the purpose of depicting the varied interrelationships among the
decisions made throughout the segments and levels of organization
Useful in demonstrating to client management the variety and kinds of
decisions that the organization must make.
2. Input/Output Analysis
most commonly used for estimating the impacts of positive or negative
economic shocks and analyzing the ripple effects throughout an economy.
3. Structured Analysis
Key assumption is that any organization is comprised of a number of well-
defined functions, which in turn are made up of a group of activities.
4. Less-Structures Analysis
Counteract some limitations such as difficulty in application and stifling of
creativity of the consultant
a. Brainstorming
- Involves a free flow of ideas among the group members
b. Delphi approach
- Opinions are obtained from managers concerning impending present
problems or future conditions

Analysis Strategies

1. Categorization
2. Classification
3. Numerical analysis
4. Association
5. Correlation
6. Causation

46
CHAPTER 8

STAGES OF MANAGEMENT CONSULTING ENGAGEMENT PART II

D. Solution Development

This phase links to the previous phases through the deliverables, that is, the
developed solution that is to be presented as the final recommended product. Thus, it
links to the problem definition phase through the objective and other aspects revealed
in the statement of the problem definition. It links to the fact-finding and analysis phase
through the specifications of requirements and criteria and final recommendation. The
range of recommendation that consultants may be expected to produce are:

a. Solution to specific problem

b. Educational course of training program
c. Designed system component
d. Implemented system development life cycle
e. Advice or assistance
f. Expert opinion

The steps involved into this phase are:

1. Generation of solution alternatives

- It pertains to the generation and thorough search for solution
alternatives.
a. Pattern recognition and matching approach
- this approach emphasizes experience especially those having very
similar characteristics to the problem situation being investigated.
b. Brainstorming approach
c. CAMPER approach
- It stands for Substitute, Combine, Adjust, Magnify, Put to other uses,
Eliminate and Reverse
d. Delphi approach
- this employs an idea-generated concept similar to brainstorming.
Experts are individually pooled for ideas and these ideas are
subsequently summarized and presented to each participant. Each
participant reviews the feedback and the consultant again polls the
experts to establish collective responses and the process is reported until
the responses have stabilized.
2. Evaluation of solution alternatives
- This evaluation should be based upon a situational feasibility analysis
that considers all relevant dimensions. By means of qualitative and quantitative
factors chosen by the evaluator, the comparison of alternative solutions by
means of established criteria could be done which is an important evaluation
step. Moreover, each alternative solution is evaluated, through the criteria,
against all other solution alternatives and implicitly against the existing situation.
Hence, an alternative solution that does not represent as improvement over the
existing situation may immediately be eliminated. Among the areas of
consideration by which each alternative solution may be analyzed are

47
 a. Economic feasibility or cost/benefit analysis
- this may require the application of the more commonly used models as
break-even analysis, payback, net present value, internal rate of return,
optimal capital budget or make or buy analysis.
b. Operational feasibility
- this pertains to the usability of each solution alternative in the
environment and the persons or whom it is intended.
Example(areas to be considered): capability of management,
maturity of the organization, political environment, etc.
c. Technical feasibility
- This is considered with the adequacy of the existing state of technology
to meet the requirements of each solution alternative. Such
consideration should include assessment of available hardware and
software, capability of personnel and experience and aggressiveness of
the organization.
d. Scheduling feasibility
- this involves the determination if the alternative solution can be
endered operational by a specified time and/or date in order to achieve
certain objectives or avoid certain consequences.
e. Legal feasibility
- this concerns the ability of each alternative solution to meet the legal
requirements imposed by outside authorities.
f. Other evaluation factors such as simplicity, flexibility, adaptability,
sensitivity, and reliability.

3. Choice of the preferred solution alternatives

- the general rule to be followed using a decision process is
Choose the alternative solution that yields the best fit or value
relative to the established criteria
This rule can be easily applied when factors can be quantified and
related by an explicit decision model and when values concerning the future
situation are known with complete certainty. However, these conditions usually
seldom exist.

Approaches in an Environment of Certainty

In a certainty environment, there is only one event and therefore only a

single outcome for each action. When an event is certain, there is a 100% chance
of occurrence. Two approaches may be used in choosing the preferable solution
alternative in this environment:
a. Optimizing approach which typically employs one of the mathematical
techniques such as linear programming, integer programming, and dynamic
programming.
b. Satisfying approach which is used when the optimizing approach
cannot be applied. It consists of a search among the alternative solutions for any
solution that acceptably satisfies desired performance criteria.

48
Approaches in an Environment of Uncertainty

Since the environment of uncertainty does not provide sufficient

information to assign probabilities to the future states of nature, the decision
approaches are not so refined. In essence, they can only reflect personal
attitudes concerning ones willingness to accept risk. Any of the following
approaches may be used in an environment of uncertainty:
a. Maximin approach
- This approach aims to attain downside protection to insure
survival. It involves:
I. identifying the worst outcome (which is the minimum),
that can occur for any state of nature under each of
the alternative solutions
II. Choosing the alternative with the greatest (which is the
maximum) worst outcome.
b. Minimax approach
- this reflects an attitude of regret avoidance. It consists of
I. Computing the maximum opportunity loss (regret)
associated with each alternative solution for every
state of nature.
II. Computing the alternative solution that minimizes the
maximum summed-up opportunity cost.
c. Maximax approach
- this reflects an optimistic attitude of accepting a high degree of
risk in order to maximize the return. It consists of
I. Identifying the best outcome (maximum) that can occur
under any state of nature for each solution alternative.
II. Choosing the solution alternative with the greatest
(maximum) best outcome.
d. Rationality approach
- it assumes that in the absence of available information, each
state of nature has an equal probability of occurrence. It involves
I. Applying these equal probabilities to the outcome
associated with the respective states of nature.
II. Choosing the alternative solution having the highest
expected payoff.

Approaches in a Risk Environment

the probability distributions associated with the potential states of nature is

known as a risk environment. The additional data needed to develop the
profitability distribution is obtained from historical reports, marketing studies
and other fact-finding investigations. The following are the approaches under
this segment:
a. Expected value circulation
- it consist of

49
 I. Weighting the outcomes for the states of nature by the
probabilities of occurrence.
II. Adding up the weighted outcomes to obtain the
expected value of the payoff for each solution alternative
III. Choosing the solution alternative having the maximum
expected payoff.
b. Decision tree approach
- provides probabilistic results which is suitable to problem
situations in which a series of sequential decisions must be
made.
c. Monte Carlo Simulation Approach
- this involves simulating a model usually in the form of computer
program, over one or more time periods during repeated
trials or runs. During each trial or run, values for the probabilistic
factors are selected randomly from the distributions. The results
of the trials are expressed in probabilistic terms (like expected
values and standard deviations), thus producing
information concerning the likely ranges of the payoffs for the
respective solution alternatives. This approach is used in complex
situations where analytical methods cannot be applied.
d. Other risks environment approaches
- which are probabilistic approaches based on queuing theory and
game theory. These are seldom applied by managerial decision
makers.
4. Detailed development of the selected solution
- the selected solution will undergo detailed design and refinement. Its
implementation must be carefully planned in order to minimize required time
and costly mistakes. The design team members should be carefully selected on
the basis of their proficiency in technical design, skill in attaining management
involvement and understanding of the users perspective.

This stage will involve the designing of

1. Outputs
2. Inputs
3. Conversion Process
4. Resource and data bases
5. Organization

Guidelines for Solution Development

The following guidelines will be helpful throughout the solution development phase.
Some of these guidelines have already been noted: others need attention as this phase
is concluded.

1. The selected solution should be directly related to the objectives that the client
desires to achieve.
2. Maintain a comprehensive view of the problem situation and how it relates to
the overall organization. Always focus on the key issues and concerns.

50
 3. Search for all the important relationships involved in the situation.
4. Employ systematic procedures and methodologies while maintaining an
openness to creative insights.

E. Preparation and Presentation of the Report and Recommended Solution

The recommended solution should be presented in a persuasive manner if the

consultant expects to obtain the clients acceptance of the recommendation.

Some guidelines in the presentation of the recommendation are

1. The presentation should normally be made orally and accomplished by

audiovisual aids and a written report.
2. Facts and arguments should be presented in a clear, concise and nontechnical
manner.
3. Do not overwhelm the client with numerous details and unnecessary discussion
of data analysis techniques.
4. Be ready however to describe briefly the significance of any gathered facts and
the purpose of any technique employed.
5. Volunteer information concerning the risks that a recommended solution entails
and the difficulties that are expected in implementing the solution.
6. Interim presentations and written reports should be made throughout the
solution development phase. As a minimum, these presentations and reports
should be given to the client at the completion of each step. If the client
management and users have been properly involved and informed, they could
easily understand the final presentation and be open to the presented findings.

F. Implementation

Implementation in the important and lengthy phase that follows the solution
development phase during a problem-solving process. It involves the following process:

1. Development of a work plan

2. Establishment of controls over the implementation activities
3. Selection and training of needed personnel
4. Installation of needed physical facilities
5. Development of standard and documentation.
6. Testing of the solution being implemented
7. Follow-up and evaluation of the implemented solution.

These steps are typically performed in the order listed above although their sequence
will vary somewhat from engagement to engagement.

G. Follow-up Evaluation of the Implemented Solution

A thorough post-implementation evaluation should be conducted shortly after the

solution has been fully implemented. Report should be prepared as written
documentation of the evaluation and presented to management.

An illustration of this evaluation, in this case of an information system, will involve the
following:

51
 1. Compare the actual performance of the implemented system with the expected
performance
2. Compare the details of the implemented system with the documented design
3. Determine potential improvements to the new system
4. Determines means of improving the systems development methodology
employed by the client firm

An early question that must be resolved concerns who is to conduct the evaluation.
While the implementation team is most familiar with the implemented system, it may
be viewed as biased. Therefore, it is probably better to choose qualified personnel other
than members of the implementation team. Three suitable choices are:

1. A special audit team selected from among the managers of the client
organization.
2. An internal audit team that performs operational reviews as a part of its
customary duties.
3. An external team of consultants.

The follow-up evaluation is not a one-time process. Additional evaluations should be

performed at regular intervals during the operational life of the implemented system.
User needs change over time, and these changes will lead in time to the need for further
improvements via future system development cycles.

Each review and evaluation should focus on three specific areas:

1. Economics
2. Operations
3. Future performance

Economic Review

The economic review should involve the comparison of the actual benefits and costs of
the new system with the expected benefits and costs that were developed during the
system design phase. Typical questions that may be asked during an economic review
include:

a. Were the development cost estimates on target?

b. Did the expected benefits materialize?
c. Were the operational costs in line with estimates?
d. Have significant variances occurred?

The analysis is useful even when the immediate results are not likely. For example,
development costs are historical in nature and thus cannot be recovered. By learning
the reasons for variances in development costs, however, client management can
modify the system development and thus reduce development costs in future
implementations.

Operational Review

52
An operational review focuses on the actual use of the implemented system by the
intended users. Typical questions that might be asked during an operational review
include:

a. Does the system operate successfully?

b. Has the system solved organizational problems that it is intended to address?
c. Is the system being used or is it being resisted?
d. Are the automated and manual processes as efficient as intended?

An evaluation of operations after implementation should consider how well they

function, with particular emphasis (in the case of an information system) on inputs,
error rates, timeliness of outputs, and utilization of outputs. Various evaluation
techniques may be employed. For instance, a report can be terminated for a period of
time in order to determine if it is actually being used. If no one complains, the report is
probably not being used. A performance monitor can be applied, in the case of an online
information system to determine the use of frequency of a particular CRT screen.

Future Performance Review

A future performance review identifies potential improvements to the implemented

system and estimates the effort required to implement these improvements. Both
benefits and costs should be considered in this review, just as they were during the
planning of the currently implemented system.

Possible improvements, to be conducted by means of systems maintenance projects,

can be subdivided into short-term and long-term attributes. Client management can
then prioritize the tasks, determining which efforts should be undertaken immediately
and which should be delayed.

IV. Evaluating the Engagement and Post-Engagement Follow-up

Evaluation of Engagement

This is necessary if constant improvement and refinement in the quality of future

advisory services is to be achieved. Several benefits may be realized through an effective
formal or informal evalutation program and these are:

1. It will provide direction for staff training program in the management advisory
services division.
2. It will serve as a basis for evaluating on-the-job performance of staff personnel.
3. It will provide data for determining required resources for subsequent similar
engagements.
4. It will provide tangible evidence of quality consciousness consistent with the
other areas of a CPAs practice.

The evaluation will formally cover the following:

1. Proposal
2. Engagement program
3. Work program and schedule
4. Source data and documentation

53
 5. Reports
6. Results

The AICPA recommends in its Guidelines Series No. 1 the following criteria for the
effective evaluation of the above-mentioned items.

These are:

Proposal

1. Were specific problems with the client encountered which might not have arisen
if the problem area had been adequately covered in the proposal letter?
2. Did the proposal letter recognize all requirements of firm policy in establishing
the engagement?

Engagement Program:

1. Did additions to or deletions from the planned scope occur during the
engagement? For what reason? Were these changes approved by responsible
client personnel?
2. Is there evidence that the skill level of personnel utilized was not commensurate
with the requirements of the phase to which they were assigned? If so, please
specify the indicator, phase, individual and recommendations for future
engagements.
3. Were utilized techniques performed in accordance with firm policy? What
change in techniques would you recommend for a similar engagement?

Schedule:

1. Did actual duration differ significantly from plan? State your opinion as to
reason(s) for deviation.
2. If dates of interim reports or engagement completion were not in accordance
with prior client agreement, state reason.

Documentation:

1. Were recommendations to the client, oral or written, supported by adequate

evidential matter in the work papers?
2. Are there specific respects in which organization or content of work papers are
not in accordance with minimum standards of the firm? If so, describe.
3. Was it necessary to do additional work and/or recontact client for additional for
madditional information before making a final report? Describe circumstances.

Reports:

1. Were progress meetings held with, or interim reports made to the client? If not,
state reason.
2. Did errors of fact occur in interim or final reports?
3. Are there specific changes which you would recommend in report content,
format or style to improve effectiveness?

Results

54
Deficiencies in any of the above may or may not have a major impact on the most
important criteria the results. It is in the evaluation of results that extreme caution
must be observed so that personal views are not allowed to cloud available objective
and quantifiable evidence. The following would seem to be minimum criteria for results:

1. Were all recommendations accepted by the client? If not, why?

2. What degree of satisfaction was expressed by the client?
3. Describe any phase or circumstances in which dissatisfaction was expressed (or
implied) by the client and the reason.
4. Were additional services, either implementation or a new survey engagement,
requested by the client?

Post Engagement Follow-up

Sometimes programs and systems appear to operate effectively during the first few
months after implementation but later run into difficulty because of reasons like:

a. Change in operating conditions

b. Design may prove to be faulty, etc.

It is therefore important that the CPA should provide for observation of the programs or
systems installed for a sufficiently long period to uncover deficiencies early and to make
the necessary modifications. Such follow-ups are usually agreed upon with the client
either in their original agreement or in the course of the work.

55
CHAPTER 9

PROJECT MANAGEMENT AND CONTROL

PROJECT MANAGEMENT

-It means planning, executing, scheduling, and controlling activities to provide solutions
to the identified problems. Understanding and using some form of the project
management tools is critical to continued successful consulting projects. The use of
these tools provides current information for responding to frequently asked client
questions such as What is the status of the project? and When will the tasks be
completed?

A. Project Plan
- Engagement planning actually begins the first time a potential client contacts the
consultant and continues in more detail as preparation and presentation of the
project proposal is made. After the proposal is accepted the consultant turns more
attention to the development of a detailed task-by-task work plan that will
become the blueprint for the remainder of the project.
- Project plan serves as the nucleus of a consulting engagement and provides a
guide to staff assignment and completion dates. It also provides the consultant
with an updated status at any point during the project. To maintain a current
status, the project plan should be updated at least weekly, providing an ongoing
comparison of planned and actual resources and results
- this phase of the engagement usually begins with an engagement kick off
meeting, a key element in getting the project off to a good start.
- The important topics to be addressed at the meeting include:
a. Review of the engagement proposal
- this serves as a means to summarize what has taken place to date and
as a springboard for looking ahead to the project objectives and work
required. This review should concentrate on the objectives, scope and
benefits to be realized from the engagement. Also, there should be a
resolution on exactly how and when achievement of the benefits will be
measured.
b. Discussion of the work objectives
- A logical follow-on to discussion of engagement objectives and benefits
is agreement on the end results of the project. A clear definition of the
final product must be formulated so that everyone will know when the
end has been reached. Work products, in addition to being observable
and measurable, are related to engagement objective.
c. Definition of intermediate work results
- Once there is agreement on the end work product, the meeting should
turn to specification to intermediate work results or engagement
milestones. This is important for the following reasons:
i. They serve as the beginning point for development of the detailed
work plan that breaks up the end work product into manageable
pieces.

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 ii. They serve as measuring points for progress towards project
objectives.
iii. They serve to break the project up into mini-projects with
psychological and emotional feelings for satisfaction for reaching
a goal.
Milestones should be keyed to scheduled milestone review points to
determine if the project is on course with respect to goals, quality of
work and project schedule.
d. Responsibility assignments and client participation
- Another important matter to be covered in the kickoff meeting is to
establish responsibility for various aspects of the project. This includes
general assignment of duties for project planning and management,
project task work and review of project progress at milestone points. All
participants in the project should have a clear understanding of their
roles. The most significant responsibility assignment is project manager
or coordinator who normally will be one of the clients staff. This
arrangement can free the consultant to spend more time on technical
issues and is a good way to ensure client involvement.
- Agreement should also be reached on using the clients staff as
resources. Review committee members should also be designated at the
kickoff meeting and any other resources from the consultants office,
clients staff, or persons who will be used as technical resources during
the engagement should be mentioned at this point.
e. Project completion date
- A tentative and target completion date of the project should also be
taken up towards the end of the kickoff meeting. No firm commitment
should be made until the detailed work plan is completed. Before
deciding on the details of the kickoff meeting, a decision should be made
regarding the time, venue, participants and the agenda for the meeting.
- The kickoff meeting should end with
i. A review of the decisions and agreement reached
ii. Statement that outlines the general steps in the project and that
focuses on the development and presentation of the detailed
work plan
iii. Every participant understanding how the engagement will
proceed as well as his or her individual responsibilities.

Developing the Detailed Work Plan

The detailed work plan serves as the blueprint for execution of the engagement and a
means by which the consultant can monitor project progress. It also shows what staff
will be needed to complete the project, as well as when and for how long will they be
needed. The work plan will also provide a further classification of how much effort will
be required to deliver the work end product. This will also enable the planner to
illustrate to the client the extent of the work effort and can, if necessary, discuss
reduced scope, increased budget, additional staff, project segmenting and so forth.

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Elements/Components of the Detailed Engagement Work Plan

The detailed work plan consists of several parts and each part serves to specify in
different ways the plan for doing project work and the associated cost.

The parts include:

a) Task identification and description

this involves identifying each activity required to accomplish both intermediate
and end work results. Sources of task suggestions include project plans from
earlier engagement, use of standards task lists, suggestions from other
professional associates and from client staff.
The best way to begin is by listing the types of activities that must take place for
the first milestone to be reached. When the list seems relatively complete, it
must be refined so that tasks of a general nature are supported by the detail
activities representing the next level of definition. Each general task category
should then be further refined into more specific, definable piece of work. Each
activity in the work plan should be clearly stated and described. Furthermore,
each piece of work should conclude with a tangible product that can be
recognized and recorded.
b) Task relationship
After identifying project activities, determine the relationship among the tasks.
Certain activities can be done at any time during the project while some tasks
may depend on the completion of other activites. Determining these
relationships among the tasks can best be approached as an iterative process.
Method such as PERT (performance evaluation and review technique), Gantt
chart, bubble charts can be helpful in illustrating these relationships. Task
relationship identification is also important in pointing out which tasks have
some leeway in their performance time frame. Tasks that can be performed
independently of others are extremely valuable in the scheduling process since
they allow the project planner to make optimum use of staff time by assigning
these tasks as fill-in-work at slack time.
c) Estimating the work effort and completion time
Estimating involves determining how long, preferably in terms of worker hours,
each tasks will take. Each defined activity in the project should be evaluated in
terms of how many hours of a staff members time will be devoted to complete
the work or task. An estimate of how long a task will take can be made using
ones experience accumulated by the estimator. This can also be augmented by
keeping records of estimating performance on each previous engagement and
keeping tracks of budgeted versus actual time for the firms project work at the
milestone and even at the task level. Tasking project hour can be extremely
useful in not only evaluating performance but also for the next estimating effort.
Project estimating can be done by an individual or by a team. The team approach
can be very effective especially if the estimator is not familiar with the areas of
the project. Lastly, an estimate of task hours should be carefully reviewed for
reasonableness preferably by someone other than the estimator.
d) Scheduling tasks
It is the process of taking the task estimates and dependencies as well as the

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 project team assignments and availability and matching them against a calendar
to determine who will perform which task when and the work effort will be
completed. Task should be taken one at a time and plotted along a time line for
each prospective team member. Certain rules that the scheduler should observe
include the following
a. Assign team members a realistic number of hours each day. Eight hours is
the recommended maximum.
b. Plan ahead for weekends, holidays and scheduled vacations so that staff
availability will be realistic.
c. Match the skill levels required to complete a task with the appropriate
team member.
d. Build in the realistic delay factors.
e. Build in time factors for any unusual elements of the project.
f. Try to limit the number of persons who work on one task in order to
simplify the work and avoid extra time spend in coordination which can
be a real time-waster.
g. Schedule time for such administrative tasks as progress meetings and for
project management tasks.
e) Determining review point
This has been initially introduced during the kickoff meeting. One effective
approach so that immediate work results can be evaluated and the project
progress can be measured is to key the review points to engagement milestones.
Monthly review meetings can be scheduled regardless of other milestone review
points. Review meeting should be held regularly because they are the most
important aspect of project control.
f) Staffing the project
As a starting point, a tentative schedule of needed staff members before any one
persons work schedule and availability can be assessed. Oftentimes, an
overlooked element of project staffing is project management, which is, the
critical element in the success of the engagement. Choice of the project staff
may be limited to members available at the time, or it may include options such
as
a. Hiring new staff
b. Subcontracting portions of the work
c. Using a specialized consultant as an experienced advisor to the project
team
d. Delaying the engagement until additional persons are available.
e. Using members of the clients staff as team members.
g) Project costing
After detailed project planning, estimating, scheduling and staffing have been
completed, the planner will now be in a position to develop a detailed cost
estimate of the engagement. The basic approach for determining worker costs is
to calculate the total number of hours scheduled for each staff member and
multiply this number by the staff members billing rate. Other costs such as costs
for obtaining special outside consulting advice and contracting with third parties
should be added to the personnel costs for each project team member to arrive

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 at the project personnel costs. Also, project expenses such as travel, lodging,
meals, telephone, copying, printing, additional clerical
h) Detailed work plan review
A very critical point in the engagement is the presentation and review of the
detailed work plan. This is where client expectations come to the surface and the
future success of the engagement can be affected. The work plan becomes the
consultants means of explaining to the client how the project results will be
accomplished. Facts should be available in answering questions about details of
tasks, estimates, scheduling project team assignment and project costs. Should
there be unacceptance on the part of the client of the detailed work plan as
presented because costs may exceed earlier estimates, the consultant should be
able to present alternative strategies for continuing the engagement on a
modified basis. These modifications may involve
a. Reduction in the scope and objectives of the project including
corresponding adjustments in the work results.
b. Increase in staff availability by adding members of the clients staff to the
project team.
c. Breaking up the project into several subengagements.
d. Deferring some of the work until a later time.

The work plan review should conclude with a firm agreement on the

a. Detailed plan
b. Consent to continue funding of the engagement
c. Commitment on the client responsibilities
d. Permission to begin executing the plan

Formal approval is often advisable.

Some consultants have developed microcomputer models for project planning and
control to enable them to plan, estimate and track projects. An example of a basic
project plan format developed using spreadsheet software is provided on the following
passages.

Project plans are divided into specific sections to categorize and analyze problems prior
to providing a total solution. Major components of a good project plan include

1. A list of tasks
2. Estimated time to complete each task
3. Target completion dates
4. Estimated resource requirement by tasks.

The other photo illustrates another project plan model showing summarized hours and
fees. This summary model can be updated with other dates such as outputs and
timetables and is most appropriate for presentation to the client.

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B. Organizing the Project team
- The project team may be just one consultant or may consist of several persons.
Regardless of the number of persons, the project leader should decide which
tasks should be assigned to whom.
- A team briefing should be held before assigning the project tasks to members
of the project team. This will enable the project leader to present to the team
members the engagement background and objective and to outline clearly the
roles that each person will play in the project.
- At the end of this meeting, a sense of order and purpose should be established
and the consultant is ready to develop a professional relationship that can result
to work products that meet the clients expectations.
- In addition to the above mention items, briefing should discuss among others
the following:
a. Responsibility for clerical functions
b. Responsibility for travel arrangement
c. Working space in the clients office
d. Working hours to be observed
e. Unusual aspects of working with a particular client
f. Project progress reporting
g. Project strategy

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C. Project Schedule
- Once the overall project plan has been completed, schedules and target
completion dates should be prepared for each person assigned to the project.
- This schedule should be based on specific tasks, time estimated to complete
tasks and critical completion dates.
- The illustration below of a daily schedule is for a consultant outlining tasks for a
specific project.

D. Project Control
- A project plan can be graphically presented using two of the most common
tools
a. Gantt chart

b. PERT diagram (Project Evaluation and Review Technique)

- this outlines activities and time estimates for completing activities. It
also allows the consultant to chart activities using earliest and latest start
and completion dates to predict the overall project completion date.
Activities whose completion is critical or prerequisite to other activities

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 can be identified and these activities become the primary focus in
charting complete dates. The set of connected lines which will take the
longest time to complete is known as the critical path. Other activities
not on the critical path are addressed during slack time. This method
provides an accurate activities and prerequisites in accomplishing project
objectives.

E. Documentation policies and guidelines

Formalized documentation policies and guidelines ensure that events and
agreements affecting the project findings and conclusions are properly
documented and filed. A comprehensive approach to documentation collection
should include some variation of the file categories and source documents
described in the work paper section.

What documentation policies and guidelines should be established for internal use?

Documentation policies and guidelines should address:

1. A defined structure for all documentation with sample formats

2. Timing for preparing, updating, and completing documentation and complying
with documentation policies
3. Responsibilities for documentation and review at various project stages.

How should documentation be prepared and reviewed to ensure quality control and
responsibility for the documentation?

a. Specific procedures, providing instruction to consultants using the suggested

format, should be defined for each type of documentation. Procedures should
explain the format, give a complete example, and suggest situations and stages
within each project where the format could best be used.
b. The procedures should also identify responsibilities for completing
documentation. At the beginning of each project, the project manager should
decide what documentation formats are most appropriate and should
communicate responsibilities to other consultants working on the project.
c. Quality control review points should also be established by the project manager
at the beginning of each project.

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 d. Documentation checklists may be established by the project manager as a
required form to promote quality reviews. The checklist provides a means of
specifying documentation required for the project and staff responsible for
completing the documentation. Most checklists also include columns for
identification of manager review and corresponding review dates.

What documentation is needed to support conclusions?

a. All background data, interview results, research data, and client-prepared

documents should be filed and reviewed prior to preparing conclusions. These
findings should be analyzed, consolidated, and cross-referenced to a summary of
findings and conclusions document. Cross-referencing provides the linkage of
findings to conclusions in support of recommendations.
b. The consultant should also document
a. A statement of assumptions and alternative solutions
b. Factors influencing conclusions and recommendations
These should be cross-referenced to detail work papers and later to the
draft reports. These analyses and narratives help the consultant organize
ideas and develop alternative solutions.

How long and where should client work papers be retained?

a. Each client engagement should have an established retention period or work

papers. The retention period should be based on internal requirements, client
requirements, or legal requirements. Some engagements, such as
hardware/software selection, may have a work paper retention of 3 to 5 years
since technology advancements would significantly affect prior analyses.
b. Client work papers should be retained by the firm since the work papers are the
support for client recommendations.

Work papers

Purposes:

Work papers are necessary for the following reasons:

1. They provide historical substantiation of work performed and a basis for

developing conclusions.
2. They are a consultants source of reference during an engagement.
3. They serve as a support for recommendations once an engagement has been
completed.

A consultant gathers background data at the beginning of each project, providing an

overview of the client environment. The consultant gathers additional data while
conducting steps outlined in the project plan.

The purpose of collecting information is to research, study, and analyze client problems
relating to past, present and future events that may affect recommendations. All
alternatives, assumptions, and comparisons considered by the consultant in developing
the recommended solution should be documented in the work papers.

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Contents:

The consultant should create these documents, describing key points by listing names
and sources of information, purpose of documentation, basic facts, and the opinions
regarding the source and impact of the documented information. The most common
tools used for collecting additional information important to a particular client project
are questionnaires and interviews. An example is presented in the following passages.

The client proposal, the summary of findings analysis, and the client report are normally
a combination of a defined format and project-related narrative. By defining a basic
client report formula, for example., the consultant can enhance the consistency and
quality of all reports.

The required format would include all or part of the following sections:

a. Statement of engagement activities

b. Background information and activities conducted to analyze the clients business
c. Findings and conclusions
d. Recommendations
e. Benefits of implementing recommendations

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 Example of a Suggested Work Paper Content by
Section and File Category

Time Management

Importance of time management

Effectively managing time is rewarding and is a good investment. Moreover, it is not just
about doing more, it is also about enjoying doing things more. Appearing relaxed and in
control is an important part of demonstrating leadership.

Effective Time Management

Time management is more a matter of good management practice than complex

systems. Effective time managers follow a series of simple rules so that they
make best use of their time. The most important rules are as follows:

1. Be aware of time
2. Prioritize tasks
3. Anticipate tasks
4. Avoid putting off jobs
5. Break down tasks
6. Ensure deadlines are understood
7. Be prepared
8. Support others with time management

Time Management Systems

A time management system has three essential parts, namely:

a. A guide to breaking down project into their component tasks.

b. A means of reminding when the task is due to be completed.
c. A guide to reviewing the tasks.

One-page plans

- It is a flow chart that illustrates the stage of the project. Time is usually depicted
along the horizontal axis while the different types of activity are defined on the
vertical axis.

Tasks-to-do- list

- It is a system that divides the project into intervals (usually weeks or days). Each
interval is given a page of its own and on this page the tasks that need to be
done can be listed.

Job cards

- It splits project into task types rather than time intervals. Each task is given its
own card with a note as to when it should be completed.

The project log

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 - It can be used as the basis of or to support effective time management. This does
not only allows you to keep track of tasks and make time management more
effective, it also provides a forum for their review, thus making time
management part of the active learning program.

Managing Project Shocks

Some of the more common reasons why the project is knocked off course are as
follows:

1. Changes in clients interests

2. Changes in the clients business situation
3. Cuts in expenditure
4. Misinterpretation of information
5. Loss of key people

Responding to Project Shocks

Each shock must be tackled on its own terms. However, there are a series of ground
rules that make the management of a crisis effective.

1. Be prepared
2. Avoid panic
3. Refer back to aims and objectives
4. Evaluate resource implication
5. Modify plans
6. Communicate

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CHAPTER 10

PRESENTATION OF ENGAGEMENT REPORTS

Every consulting engagement must include, in some form, a presentation of the

results to the client. Presenting results is a universal element of consulting work, and the
success of a consultant will depend on his/her skill at communicating what he/she has
done.

Reasons why consultants have difficulty presenting results:

1. Presentation involve hard work.

2. Presenting results involves risks.
3. Effective communication is now a well-developed skill area for many consultants.
Preparing for the presentation

There are two points a consultant must address before making the presentation:

A. Deciding What to Say

The consultant should consider the following suggestions for identifying
what is important in the data that he/she collects:

1. Keep a list of ideas and observations as the project progresses.

2. Add handwritten summary or highlight points in the margins of flow
diagrams and interview notes, as they are prepared.
3. Use the Delphi research technique with the other members of the
engagement team to develop a list of important points. This approach
calls for similar questions to be asked of each person, without the
others being present.
4. Try to psyche out the client. The consultant should try to put himself
in the place of the key person or people in the client organization and
think about what issues are more important to each of them.

B. Choosing the method of presentation or How to Say It

Having assembled the material the consultant will convey to the client,
he/she moves on the second consideration in presentation of results how to
present what he/she wants to say. In choosing the method, concentrate on one
objective: to communicate effectively at a minimal cost to the client.

The choice of presentation methods may not always be within the

consultants control. Circumstances may restrict the consultants options, or the
format may be specified by his/her agreement with the client. The consultant
should choose the presentation method carefully to the extent he/she can control
the choice.

Factors to consider:

1. Purpose of the engagement

2. Contractual requirements or other commitments the consultants may
have made regarding reports, briefings, demonstrations, etc.
3. Time available to prepare
4. Size of the budget for the project
5. Type of presentation that best fits the personality of the client
6. Logistis whether the presentation must be made to one person, to
several people in the different clients, etc.

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WRITTEN PRESENTATION

The classical method of presenting is the written report. Many clients find
written reports comfortable or simply expect them. Consultants also become attached to
written reports because they look impressive and prove that something tangible was
done in the clients behalf. Unfortunately, written presentations are often the most
costly and least effective method of conveying results.

Types of Written Presentations

1. Formal Reports
Formal reports represent classic styles of presentation. They are
difficult to write, expensive to produce, and almost never read in their
entirety by anyone other than the consultants proofreader. Nevertheless,
formal written reports are often required y clients, and the consultant
should develop the ability to prepare them when necessary.
Formal reports are typically divided up into major sections so that
their contents will be accessible and readable.
Guidelines for structuring formal reports: (not all reports include
each section, but the headings are typical)
1. Executive Summary high level sypnosis of findings,
recommendations, and benefits, which contains key
information for clients who have too little time, or interest, to
read the entire report.
2. Project Background short history of the project to help the
reader understand the assignment and to place the project in
perspective
3. Objectives and Scope restatement of the purpose and
limitation of the engagement
4. Engagement Methodology description of the techniques
and approaches used in carrying out the engagement.
5. Analysis and Synthesis description and detailing of the
analysis undertake and the basis for major findings reached
through the analysis.
6. Findings and Conclusions listing of the major conclusions
that may also include alternatives the consultant considered
and reasons for reaching the conclusions selected.
7. Recommendations statements aimed at guiding the client
toward a course of action that corresponds to the
engagements objectives and to the consultants findings.
8. Expected Benefits highlights of the results that can be
achieved by carrying out the recommendations.
9. Implementation Guide description of specific methods for
implementing recommendations, addressing sequence, timing,
resources required, and constraints involved
10. Appendices any necessary charts, exhibits, tables, or
analyses related to the engagement.
2. Informal Letters and Memoranda
These familiar forms of business correspondence are often used
with clients who require written reports but are able to do without
formality. They can be an effective means of communicating status,
findings and recommendations. By avoiding the pomp and flourishes of a
formal report, they encourage an economical and timely flow of
information between consultant and client.
3. Discussion Outlines
This form consists of skeletal statements that assist in conveying
information to the client. They are used in conjunction with meetings or

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 conversations at which results are explained and discussed. As such,
they represent a hybrid form of the written and in-person presentations,
combining some of the best elements of each. They provide a written
record, to which the client can refer, while affording the economy of
preparation and the directness and flexibility of face-to-face
communication.
A useful format for the discussion outline incorporates generous
spacing between points, to allow for note-taking.
4. Graphic Summaries
This enhanced form of discussion outline combines highlighted
wording with graphic symbols in order to convey quickly and clearly
information. The graphics capability of microcomputers can be used to
transmit important information vividly and rapidly to your client.
This form is particularly useful for management or operational
reviews, and for conceptual engagements involving marketing or strategic
planning.
5. Charts, Diagrams, Layouts, and Matrix Arrays
Charts or diagrams for some engagements constitute the entire
written presentation. In data processing or methods analysis projects,
flowcharts of various types may represent a complete work product for
the consultant. Other examples of this form includes organizational
charts, facility layouts, and matrix arrays. Matrix Arrays can be particularly
useful for conveying alternatives and recommended actions to clients.
6. Prospectuses and Manuals
Some engagements have as their primary purpose the production
of a written document. Such is the case when consultants are asked to
write procedures manuals or to develop prospectuses or private
placement memoranda. These represent both the work product and the
presentation of results and are usually accompanied by a brief transmittal
letter that records the transfer of the work product, the data transferred,
and the recipient.

Planning and Developing Written Material

Preparing to Write

The objective is to simply get the ideas onto paper in any way he/she can. There
will be ample opportunity later to check words, grammar, punctuation and sequence, in
order to make the communication correct and effective. Remember, there will be
numerous revisions to the original version, so one does not need to create a perfect
product at the outset.

Organizing the Material

Assuming the data the consultant collected during the engagement are kept
logical, retrievable form, report preparation becomes a process of editing and arranging
material. Generally, the consultant will have far more information, ideas, and conclusions
than he/he should put in a report.

The key skills involved in report preparation become Wordsmithing and Editing.
Wordsmithing is the art of saying things properly and effectively; it touches on grammar,
style, and construction.

The Keys to good editing:

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 1. Purpose should be clearly defined
2. Determine the subjects that must be covered.
3. Identify the audience or prospective readers.
Enhancing Readability

A consultant should try to make his/her writing as readable as possible. Here are
a few points that will help enhance the readability of presentations:

a. Write short reports if possible.

b. Arrange the material for emphasis.
c. Avoid long, complex paragraphs and sentences.
d. Avoid jargon, slang, and unnecessary technical terms.
e. Use the active voice and direct, descriptive words rather than euphemisms.
f. Use pictures, graphs and charts whenever appropriate.
g. Use numbers selectively.

Techniques for Presenting Written Reports

There are several methods of transferring the report, some more effective than
others. One way is simply send the report by mail or messenger. A second method is to
hand deliver the report and discuss it with the client before leaving it to be read. A third
method is to have a brief presentation, covering the major points in the report, then
distribute the report for the client to read.

In-person Presentations

If the concentration is on an oral report, the written presentation may be

coincidental or entirely absent. An oral presentation can be more difficult to carry out
satisfactorily than a written report because it involves more considerations. Presenting
an oral report requires that the consultant assemble his/her thoughts, define scope, and
develop wording, much like a written presentation. In addition, he/she must consider
such factors as location of the presentation, equipment needed, and the preparation of
visual aids. All in all, In-person presentations are more demanding than written
presentations, however, they have some significant advantages.

How to Prepare an In-person Presentation

The process begins in a way very similar to preparing written presentations: The
consultant defines the objectives, considers the audience, prepares an outline, etc. It is
not necessary, or even desirable, to write out a presentation as if it were a report. The
consultant needs only to list the major points to be communicated.

Aside from the material to be presented, there are other important considerations
for in-person or oral presentation. The major ones are:

1. Length of time for the presentation

2. Timing
3. Size of the audience
4. Composition of audience
5. Atmosphere
6. Dress

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Making the Presentation

Before presenting:

Arrive early.
Check out room, equipment, podium, lights, etc.
Remove distractions such as keys, coins and pens from your pockets.
Look your best.
Be confident, emphasize positive thoughts.
Arrange for a signal when your time is almost up.
During presentation

Stand tall.
Command your audience.
Make eye contact
Speak up, enunciate clearly.
Vary your pace.
Pause periodically.
Move naturally.
Watch the audience, and adjust as needed.
Finish on time (no exceptions).

Common Mistakes in Presenting Results

1. Answering the right questions but failing to provide enough background on the
basis for the conclusions.
2. Failing to address the clients primary concerns, key issues or pet peeves.
3. Ignoring the significance of timing and emotional considerations when delivering
a report or presentation.
4. Failing to obtain concurrence on conclusions and recommendations from
members of the clients staff who must support them or carry them out.
5. Producing a report that seems cheap by comparison to the amount of fees
6. Allowing inadequate time to prepare the presentation.
7. Making the client feel silly, nave, negligent, or undeserving of respect in either
the tone or content of the presentation.
8. Showing sloppiness, inattention to detail, or superficiality in the presentation.
9. Surprising the client, especially in a group meeting or in a written report that
cannot be retracted.
10. Trying to sell future services via presentation.

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